Derivative Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative instruments and hedging activities

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Cross Currency Swaps

In a cross-currency swap, interest payments and principal in one currency are exchanged for principal and interest payments in a different currency. Interest payments are exchanged at fixed intervals during the life of the agreement. Changes in the fair value of cross-currency swaps designated as net investment hedges are recognized as a component of OCI as a foreign currency translation adjustment and are recognized in earnings only upon the sale or substantial liquidation of the hedged net investment. In assessing the effectiveness of these hedges, we use a method based on changes in spot rates to measure the impact of the foreign currency exchange rate fluctuations on both our foreign subsidiary net investment and the related swap. Under this method, changes in the fair value of the hedging instrument, other than those due to changes in the spot rate, are initially recorded in OCI as a translation adjustment. The excluded component is recognized on a systematic and rational basis by accruing the swap payments and receipts within Interest expense, net.

On August 15, 2019, we entered into a cross-currency swap designated as a net investment hedge to hedge the Euro currency exposure of our net investment in European operations. This agreement is a contract to exchange floating-rate Euro payments for floating-rate U.S. dollar payments through August 15, 2022. The payments are based on a notional basis of €450.0 million ($498.0 million) and settle quarterly.

Interest Rate Swaps

Interest rate swap agreements are contracts to exchange floating rate for fixed rate payments (or vice versa) over the life of the agreement without the exchange of the underlying notional amounts. The notional amounts of the interest rate swap agreements are used to measure interest to be paid or received and do not represent the amount of exposure to credit loss. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense. There were no active designated or non-designated interest rate swaps as of December 31, 2020 and December 31, 2019.

Foreign Currency Forwards

In a foreign currency forward, a contract is written to exchange currencies at a fixed exchange rate at a future settlement date. We designate foreign currency forwards primarily as cash flow hedges to protect against

foreign currency fluctuations of probable forecasted purchases and sales. The settlement dates of foreign currency forwards range from 1 to 60 months.

    Foreign currency forward contracts were as follows (in millions):

	Notional Amount
	December 31, 2020		December 31, 2019
Israeli Shekel (ILS)	$	436.5	$	712.7
European Euro (EUR)	312.6		157.6
United States Dollar (USD)	101.5		92.4
British Pound (GBP)	92.3		86.9
Danish Krone (DKK)	65.2		51.7
Chinese Yuan (CNY)	49.1		20.9
Swedish Krona (SEK)	41.2		42.0
Canadian Dollar (CAD)	36.8		41.3
Polish Zloty (PLZ)	21.8		21.5
Mexican Peso (MPX)	15.6		9.7
Australian Dollar (AUD)	11.3		1.2
Switzerland Franc (CHF)	8.2		4.1
Norwegian Krone (NOK)	7.9		6.6
Romanian New Leu (RON)	3.6		2.3
Other	6.2		6.3
Total	$	1,209.8	$	1,257.2

Effects of Derivatives on the Financial Statements

    The below tables indicate the effects of all derivative instruments on the Consolidated Financial Statements. All amounts exclude income tax effects.

    The balance sheet location and gross fair value of our outstanding derivative instruments were as follows (in millions):

		Asset Derivatives
		Fair Value
		Year Ended
	Balance Sheet Location	December 31, 2020		December 31, 2019
Designated derivatives
Foreign currency forward contracts	Prepaid expenses and other current assets	$	13.2	$	1.0
Foreign currency forward contracts	Other non-current assets	0.5		—
Cross-currency swap	Other non-current assets	6.3		26.3
Total designated derivatives		$	20.0	$	27.3
Non-designated derivatives
Foreign currency forward contracts	Prepaid expenses and other current assets	$	7.8	$	3.3

		Liability Derivatives
		Fair Value
		Year Ended
	Balance Sheet Location	December 31, 2020		December 31, 2019
Designated derivatives
Foreign currency forward contracts	Other accrued liabilities	$	5.8	$	4.7
Non-designated derivatives
Foreign currency forward contracts	Other accrued liabilities	$	2.4	$	3.7

    The following tables summarize the effect of derivative instruments designated as hedging instruments in Accumulated Other Comprehensive Income ("AOCI") (in millions):

	Year Ended
	December 31, 2020
Instrument	Amount of Gain/(Loss) Recorded in OCI(1)		Classification of Gain/(Loss) Reclassified from AOCI into Earnings	Amount of Gain/(Loss) Reclassified from AOCI into Earnings		Classification of Gain/(Loss) Recognized into Earnings Related to Amounts Excluded from Effectiveness Testing	Amount of Gain/(Loss) Recognized in Earnings on Derivatives Related to Amounts Excluded from Effectiveness Testing
Cash flow hedges
Treasury locks	$	—	Interest expense, net	$	(0.1)	Interest expense, net	$	—
Interest rate swap agreements	—		Interest expense, net	(1.8)		Interest expense, net	—
Foreign currency forward contracts	7.3		Net sales	0.2		Net sales	0.1
			Cost of sales	2.9		Cost of sales	1.1
						Other (income) expense, net	0.5
	$	7.3		$	1.2		$	1.7
Net investment hedges
Cross-currency swap	$	(20.0)				Interest expense, net	$	6.6
Foreign currency forward contract	(11.2)					Interest expense, net	(0.1)
	$	(31.2)					$	6.5

    (1) Net loss of $6.4 million is expected to be reclassified out of AOCI into earnings during the next 12 months.

	Year Ended
	December 31, 2019
Instrument	Amount of Gain/(Loss) Recorded in OCI		Classification of Gain/(Loss) Reclassified from AOCI into Earnings	Amount of Gain/(Loss) Reclassified from AOCI into Earnings		Classification of Gain/(Loss) Recognized into Earnings Related to Amounts Excluded from Effectiveness Testing	Amount of Gain/(Loss) Recognized in Earnings on Derivatives Related to Amounts Excluded from Effectiveness Testing
Cash flow hedges
Treasury locks	$	—	Interest expense, net	$	(0.1)	Interest expense, net	$	—
Interest rate swap agreements	—		Interest expense, net	(1.8)		Interest expense, net	—
Foreign currency forward contracts	(1.2)		Net sales	2.5		Net sales	(2.1)
			Cost of sales	0.1		Cost of sales	(1.5)
	$	(1.2)		$	0.7		$	(3.6)
Net investment hedges
Cross-currency swap	$	31.2				Interest expense, net	$	4.9

	Year Ended
	December 31, 2018
	Effective Portion
Instrument	Amount of Gain/(Loss) Recorded in OCI		Classification of Gain/(Loss) Reclassified from AOCI into Earnings	Amount of Gain/(Loss) Reclassified from AOCI into Earnings
Treasury locks	$	—	Interest expense, net	$	(0.1)
Interest rate swap agreements	—		Interest expense, net	(1.8)
Foreign currency forward contracts	(9.1)		Net sales	0.5
			Cost of sales	1.9
			Interest expense, net	(4.8)
			Other (income) expense, net	2.1
	$	(9.1)		$	(2.2)

    The amounts of (income)/expense recognized in earnings related to our non-designated derivatives on the Consolidated Statements of Operations were as follows (in millions):

		Year Ended
Non-Designated Derivatives	Income Statement Location	December 31, 2020		December 31, 2019		December 31, 2018
Foreign currency forward contracts	Other (income) expense, net	$	(10.0)	$	(25.4)	$	7.6
	Interest expense, net	6.2		1.8		(1.0)
		$	(3.8)	$	(23.6)	$	6.6

    The classification and amount of gain/(loss) recognized in earnings on fair value and hedging relationships were as follows (in millions):

	Year Ended
	December 31, 2020
	Net Sales		Cost of Sales		Interest Expense, net		Other (Income) Expense, net
Total amounts of income and expense line items presented on the Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded	$	5,063.3	$	3,248.1	$	131.2	$	17.2
The effects of cash flow hedging:
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings	$	0.2	$	2.9	$	—	$	—
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach	$	0.1	$	1.1	$	—	$	0.5
Treasury locks
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	—	$	(0.1)	$	—
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	—	$	(1.8)	$	—

	Year Ended
	December 31, 2019
	Net Sales		Cost of Sales		Interest Expense, net		Other (Income) Expense, net
Total amounts of income and expense line items presented on the Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded	$	4,837.4	$	3,064.1	$	121.7	$	(66.0)
The effects of cash flow hedging:
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings	$	2.5	$	0.1	$	—	$	—
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach	$	(2.1)	$	(1.5)	$	—	$	—
Treasury locks
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	—	$	(0.1)	$	—
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings	$	—	$	—	$	(1.8)	$	—