Financial Derivatives and Hedging

12 Months Ended

Oct. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Note 13. Financial Derivatives and Hedging

As part of the Company’s overall risk management practices the Company enters into financial derivatives, interest rate swaps designated as cash flow hedges, to hedge the Company's exposure to changes in cash flows associated with its variable rate debt.

Credit risk related to derivative transactions reflects the risk that a party to the transaction could fail to meet its obligation under the derivative contracts. Therefore, the Company’s exposure to the counterparty’s credit risk is generally limited to the amounts, if any, by which the counterparty’s obligations to the Company exceed the Company’s obligations to the counterparty. The Company’s policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings to help mitigate counterparty credit risk. From time to time, the Company enters into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on certain trade and intercompany receivables and payables. These foreign currency forward contracts are not designated as hedging instruments, and therefore the net change in their fair value is reported as a gain or loss in the Consolidated Statements of Income and Comprehensive Income. As of October 31, 2023, the notional amount of outstanding foreign currency forward contracts was $56.2 million. The resulting impact on our Consolidated Financial Statements from currency hedging activities was not significant for the years ended October 31, 2023, 2022 and 2021.

As of October 31, 2023, the Company has six interest rate swap contracts that have a total notional amount of $1.3 billion and remaining maturities of four years or less.

The following table summarizes the amounts recognized with respect to our derivative instruments within the accompanying Consolidated Statements of Income:


Periods Ended October 31,
(In millions)		2023		2022		2021
Derivatives designated as cash flow hedges	Location of (Gain)/Loss Recognized on Derivatives
Interest rate swap contracts	Interest expense (income)	$	(43.1)	$	(2.3)	$	8.0

The cumulative pre-tax impact of the gain on derivatives designated for hedge accounting is recognized in "Accumulated other comprehensive loss". The following table details the changes in the cumulative pre-tax impact of the gain on derivatives designated for hedge accounting:


(In millions)	Amount
Balance gain as of October 31, 2021	$	17.2
Amount recognized in other comprehensive income on interest rate swap contracts, gross ($79.7, net of tax)	105.1
Amount reclassified from other comprehensive income into earnings, gross ($1.7, net of tax)	2.2
Balance gain as of October 31, 2022	$	124.5
Amount recognized in other comprehensive income on interest rate swap contracts, gross ($25.7, net of tax)	33.7
Amount reclassified from other comprehensive income into earnings, gross ($(32.7), net of tax)	(43.1)
Balance gain as of October 31, 2023	$	115.1

Refer to Note 8. Stockholders’ Equity for amounts presented net of the related tax impact in "Accumulated other comprehensive loss".

The Company expects that $(48.2) million recorded as a component of "Accumulated other comprehensive loss" will be realized in our Consolidated Statements of Income over the next twelve months and the amount will vary depending on prevailing interest rates.