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Derivative Instruments and Hedging Activities
 6 Months Ended
Jun. 30, 2021
Derivative Instruments and Hedging Activities  
Derivative Instruments and Hedging Activities
9.
Derivative Instruments and Hedging Activities
Commodity Price Risk Management
At June 30, 2021 and December 31, 2020, the Company had fixed price commodity contracts with notional amounts aggregating $3.8 million and $8.8 million, respectively. As commodity contracts settle, gains (losses) as a result of changes in fair values are adjusted to the contracts with the customers through revenue.
Foreign Exchange Rate Risk Management
The Company had notional amounts outstanding under forward currency contracts and cross-currency interest rate swap agreements as of (dollars in millions):
 
    
June 30, 2021
     
December 31, 2020
  
    
Notional
Amount in U.S.
Dollars
     
Fair Value
     
Notional
Amount in U.S.
Dollars
     
Fair Value
  
Forward currency contracts (1):
                                    
Assets
    $ 23.5      $ —        $ 175.8      $ 2.1  
Liabilities
      111.0        (0.6 )       102.5        (0.4 ) 
Cross-currency and interest rate swap agreements (2):
                                    
Liabilities
      505.0        (32.8 )       505.0        (53.9 ) 
Long-term debt
  
      
  
      
  
      
  
      
Liabilities
  
 
320.9
 
  
 
(23.0
) 
  
 
335.5
 
  
 
(37.6
) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 960.4      $ (56.4 )     $ 1,118.8      $ (89.8 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
(1)
Derivatives not designated as accounting hedges.
(2)
Derivatives designated as accounting hedges.
In addition, the Company periodically enters into purchase and sales contracts denominated in currencies other than the functional currency of the parties to the transaction. The Company accounts for these transactions separately valuing the “embedded derivative” component of these contracts. The contracts, denominated in currencies other than the functional currency of the transacting parties, amounted to $6.2 million for the delivery of products and $5.7 million for the purchase of products at June 30, 2021 and $7.5 million for the delivery of products and $4.8 million for the purchase of products at December 31, 2020. The changes in the fair value of these embedded derivatives are recorded in interest and other income (expense), net in the consolidated statements of income and comprehensive income (loss).
 
The derivative instruments described above are recorded in the unaudited condensed consolidated balance sheets for the periods ended as follows (dollars in millions):
 
    
June 30, 2021
     
December 31, 2020
  
Derivatives designated as hedging instruments
                  
Interest rate cross-currency swap agreements
                  
Other current assets
    $ 6.6      $ 7.6  
Other current liabilities
      (11.0 )       (4.3 ) 
Other long-term li
a
bilities
      (28.4 )       (57.2 ) 
    
 
 
     
 
 
  
 
  
 
(32.8
) 
  
 
(53.9
) 
Long-term debt
  
      
  
      
Long-term debt
  
 
(23.0
) 
  
 
(37.6
) 
 
  
 
 
 
  
 
 
 
Total derivatives designated as hedging instruments
      (55.8 )       (91.5 ) 
    
 
 
     
 
 
  
Derivatives not designated as hedging instruments
                  
Forward currency contracts
                  
Other current assets
    $ —        $ 2.1  
Other current liabilities
      (0.6 )       (0.4 ) 
Embedded derivatives in purchase and delivery contracts
                  
Other current assets
      —          0.1  
Other current liabilities
      (0.3 )       —    
Fixed price commodity contracts
                  
Other current assets
      2.2        3.1  
    
 
 
     
 
 
  
Total derivatives not designated as hedging instruments
      1.3        4.9  
    
 
 
     
 
 
  
Total derivatives
    $ (54.5 )     $ (86.6 ) 
    
 
 
     
 
 
  
 
The following is a summary of the activity included in the unaudited condensed consolidated statements of income and comprehensive income related to the derivative instruments described above (in millions):
 
 
 
 
 
Location of gain (loss) recognized in income on derivative
 
       
 
 
 
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
 
 
Financial Statement Classification
 
2021
 
 
2020
 
 
2021
 
 
2020
 
Derivatives not designated as hedging instruments
 
      
 
      
 
      
 
      
Forward currency contracts
  
Interest and other income (expense), net
  
$
 1.1
 
 
$
 0.3
 
 
$
 (3.9
) 
 
$
 (0.2
) 
Embedded derivatives in
 

purchase
 
and delivery
contracts
  
Interest and other income (expense), net
  
 
—
 
 
 
 0.3
 
 
 
 (0.4
) 
 
 
 0.9
 
    
 
   
 
 
    
 
 
    
 
 
    
 
 
  
 
  
 
  
 
 1.1
 
 
 
 0.6
 
 
 
 (4.3
) 
 
 
 0.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives designated as cash flow hedging instruments
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate cross-currency
swap agreements
  
Interest and other income (expense), net
  
$
 (1.2
) 
 
$
 (0.8
) 
 
$
 (2.3
) 
 
$
 (0.8
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives designated as net investment hedging instruments
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate cross-currency
swap agreements
  
Interest and other income (expense), net
  
$
 2.5
 
 
$
 2.6
 
 
$
 5.0
 
 
$
 5.2
 
 
 
 
  
 
 1.3
 
 
 
 1.8
 
 
 
 2.7
 
 
 
 4.4
 
         
 
 
    
 
 
    
 
 
    
 
 
  
Total
  
 
  
$
 2.4
 
 
$
 2.4
 
 
$
 (1.6
)
 
$
 5.1
 
         
 
 
    
 
 
    
 
 
    
 
 
  
     
 
 
 
 
Amount of unrealized gain (loss) on contracts recognized in
other comprehensive income (loss)
 
       
 
 
 
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
 
 
Financial Statement Classification
 
2021
 
 
2020
 
 
2021
 
 
2020
 
Derivatives designated as cash flow hedging instruments
Interest rate cross-currency swap agreements
 
Accumulated other comprehensive income, net of tax
 
 
0.7
 
 
 
(2.9
) 
 
 
10.6
 
 
 
(21.9
) 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
0.7
 
 
 
(2.9
) 
 
 
10.6
 
 
 
(21.9
) 
Derivatives designated as net investment hedging instruments
 
      
 
      
 
      
 
      
Interest rate cross-currency swap agreements
 
Accumulated other comprehensive income, net of tax
 
 
0.4
 
 
 
(8.3
) 
 
 
18.2
 
 
 
21.6
 
Long-term debt
 
Accumulated other comprehensive income, net of tax
 
 
(0.7
) 
 
 
(6.2
) 
 
 
20.0
 
 
 
(7.0
) 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
(0.3
) 
 
 
(14.5
) 
 
 
38.2
 
 
 
14.6
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
  
 
 
0.4
 
 
 
(17.4
) 
 
 
48.8
 
 
 
(7.3
)