We are exposed to market risk from changes in foreign exchange rates, interest rates and commodity prices that could impact our results of operations, cash flows and financial condition. We use interest rate derivatives to manage our exposures to interest rates. At inception, interest rate swap derivatives that we designate as hedging instruments are formally documented as a hedge of a forecasted transaction or cash flow hedge. We also formally assess, both at inception and at least quarterly thereafter, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged item. If it is determined that a derivative ceases to be a highly effective hedge, or if the anticipated transaction is no longer probable of occurring, we discontinue hedge accounting and any future mark-to-market adjustments are recognized in earnings. We use derivative financial instruments as risk management tools and not for speculative trading purposes.

We only enter into derivative transactions with established financial institution counterparties having an investment-grade credit rating. We monitor counterparty credit ratings on a regular basis. All of our derivative transactions with counterparties are governed by master International Swap and Derivatives Association agreements (“ISDAs”) with netting arrangements. These agreements can

limit our exposure in situations where we have gain and loss positions outstanding with a single counterparty. We do not post nor do we receive cash collateral with any counterparty for our derivative transactions. These ISDAs do not have any credit contingent features; however, a default under our bank credit facility would trigger a default under these agreements. Exposure to individual counterparties is controlled and we consider the risk of counterparty default to be negligible.

We utilize interest rate swaps to minimize the fluctuations in earnings caused by interest rate volatility. These swaps are designated as cash flow hedges against changes in interest rates for a portion of our variable rate debt. Effective the second quarter 2020, we adopted Accounting Standards Update 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” (“ASU 2020-04”) which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”). In March 2023, we amended our interest rate swaps in accordance with ASU 2020-04, changing our hedged interest rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”).

The following table summarizes our interest rate swaps as of June 30, 2023:


Trade Date	Notional Amount		Coverage Period	Risk Coverage
November 28, 2018	$	200.0	November 2018 to November 2023	USD-SOFR
September 19, 2022	$	25.0	September 2022 to December 2023	USD-SOFR
March 10, 2020	$	50.0	March 2021 to March 2024	USD-SOFR
March 11, 2020	$	50.0	March 2021 to March 2024	USD-SOFR
November 28, 2018	$	100.0	March 2021 to March 2025	USD-SOFR

Under the terms of our interest rate swaps above, we pay a fixed rate monthly and receive 1-month SOFR, inclusive of a 0% floor.

The following tables detail amounts related to our derivatives as of June 30, 2023 and December 31, 2022. We did not have any derivative assets or liabilities not designated as hedging instruments as of June 30, 2023 or December 31, 2022. The derivative asset amounts below are shown gross and have not been netted.


	Derivative Assets
		Fair Value
	Balance Sheet Location	June 30, 2023		December 31, 2022
Interest rate swap contracts	Other current assets	$	5.6	$	3.7
Interest rate swap contracts	Other non-current assets		3.1		7.7


	Amount of Gain Recognized in AOCI				Location of Gain Reclassified from AOCI into Net Earnings	Gain Reclassified from AOCI into Net Earnings
	Six Months Ended					Three Months Ended				Six Months Ended
	June 30,					June 30,				June 30,
	2023		2022			2023		2022		2023		2022
Derivatives in cash flow hedging relationships
Interest rate swap contracts	$	2.1	$	21.7	Interest expense	$	2.9	$	1.4	$	5.3	$	3.5

As of June 30, 2023, the amount of existing gains in Accumulated Other Comprehensive Income (“AOCI”) expected to be recognized in net earnings over the next twelve months was $8.3 million.