As part of its risk management strategy, the Company enters into derivative contracts to hedge against interest rate and foreign currency risk.

Interest-Rate Contracts: The Company enters into various interest-rate contracts, including interest-rate swaps and cross currency interest-rate swaps. Interest-rate swaps involve the exchange of fixed for floating rate or floating for fixed rate interest payments based on the contractual notional amounts in a single currency. Cross currency interest-rate swaps involve the exchange of notional amounts and interest payments in different currencies. The Company is exposed to interest-rate and exchange-rate risk caused by market volatility as a result of its borrowing activities. The objective of these contracts is to mitigate the fluctuations on earnings, cash flows and fair value of borrowings. Net amounts paid or received are reflected as adjustments to interest expense.

At December 31, 2020, the notional amount of the Company’s interest-rate contracts was $3,280.5. Notional maturities for all interest-rate contracts are $1,241.1 for 2021, $950.0 for 2022, $761.8 for 2023, $169.6 for 2024, $58.9 for 2025 and $99.1 thereafter.

Foreign-Exchange Contracts: The Company enters into foreign-exchange contracts to hedge certain anticipated transactions and assets and liabilities denominated in foreign currencies, particularly the Canadian dollar, the euro, the British pound, the Australian dollar, the Brazilian real and the Mexican peso. The objective is to reduce fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates. The Company enters into foreign-exchange contracts as net investment hedges to reduce the foreign currency exposure from its investments in foreign subsidiaries. At December 31, 2020, the notional amount of the outstanding foreign-exchange contracts was $1,128.8. Foreign-exchange contracts mature within one year.

The following table presents the balance sheet classification, fair value, gross and pro forma net amounts of derivative financial instruments:

At December 31,	2020						2019
	ASSETS			LIABILITIES			ASSETS			LIABILITIES
Derivatives designated under hedge accounting:
Interest-rate contracts:
Financial Services:
Other assets	$	16.4					$	45.8
Deferred taxes and other liabilities				$	116.1					$	31.0
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets		2.7						10.1
Accounts payable, accrued expenses and other					35.9						9.2
Financial Services:
Deferred taxes and other liabilities					1.2
	$	19.1		$	153.2		$	55.9		$	40.2
Derivatives not designated as hedging instruments:
Foreign-exchange contracts:
Truck, Parts and Other:
Other current assets	$	1.1					$	.4
Accounts payable, accrued expenses and other				$	3.3					$	1.8
Financial Services:
Other assets		.3
Deferred taxes and other liabilities					3.4						2.3
	$	1.4		$	6.7		$	.4		$	4.1
Gross amounts recognized in Balance Sheet	$	20.5		$	159.9		$	56.3		$	44.3
Less amounts not offset in financial instruments:
Truck, Parts and Other:
Foreign-exchange contracts		(2.1	)		(2.1	)		(.4	)		(.4	)
Financial Services:
Interest-rate contracts		(12.0	)		(12.0	)		(8.6	)		(8.6	)
Pro forma net amount	$	6.4		$	145.8		$	47.3		$	35.3

The following table presents the amount of (gain) loss from derivative financial instruments reclassified from AOCI into the Consolidated Statements of Income:

Year Ended December 31,		2020			2019			2018
Truck, Parts and Other:
Cash flow hedges	$	(6.9	)	$	19.2		$	(2.8	)
Net investment hedge		(5.6	)		(4.6	)
Total	$	(12.5	)	$	14.6		$	(2.8	)

Financial Services:
Fair value hedges		1.1			1.5			1.8
Cash flow hedges		94.5			32.5			(118.7	)
Total	$	95.6		$	34.0		$	(116.9	)

Changes in the fair value of derivatives designated as fair value hedges are recorded in earnings together with the changes in fair value of the hedged item attributable to the risk being hedged. The following table presents the amounts recorded on the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges:

The above table excludes the cumulative basis adjustments on discontinued hedge relationships of $(.4) and $(1.5) as of December 31, 2020 and 2019, respectively.

Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts have been designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in AOCI. Amounts in AOCI are reclassified into net income in the same period in which the hedged transaction affects earnings. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 7.5 years.

The following table presents the pre-tax effects of (loss) gain on cash flow hedges recognized in other comprehensive income (loss) (OCI):

Year Ended December 31,	2020						2019						2018
	INTEREST-			FOREIGN-			INTEREST-			FOREIGN-			INTEREST-		FOREIGN-
	RATE			EXCHANGE			RATE			EXCHANGE			RATE		EXCHANGE
	CONTRACTS			CONTRACTS			CONTRACTS			CONTRACTS			CONTRACTS		CONTRACTS
(Loss) gain recognized in OCI:
Truck, Parts and Other				$	2.8					$	(31.7	)			$	4.5
Financial Services	$	(107.3	)		(.8	)	$	(44.4	)				$	117.1
	$	(107.3	)	$	2.0		$	(44.4	)	$	(31.7	)	$	117.1	$	4.5

The amount of loss recorded in AOCI at December 31, 2020 that is estimated to be reclassified into earnings in the following 12 months if interest rates and exchange rates remain unchanged is approximately $15.0, net of taxes. The fixed interest earned on finance receivables will offset the amount recognized in interest expense, resulting in a stable interest margin consistent with the Company’s risk management strategy.

The amount of gains or losses reclassified out of AOCI into net income based on the probability that the original forecasted transactions would not occur was nil for the years ended December 31, 2020, 2019 and 2018.

Changes in the fair value of derivatives designated as net investment hedges are recorded in AOCI as an adjustment to the Cumulative Translation Adjustment (CTA). At December 31, 2020, the notional amount of the outstanding net investment hedges was $344.8. For the year ended December 31, 2020, the pre-tax loss recognized in OCI for the net investment hedges was $20.4.

For other risk management purposes, the Company enters into derivative instruments that do not qualify for hedge accounting. These derivative instruments are used to mitigate the risk of market volatility arising from borrowings and foreign currency denominated transactions. Changes in the fair value of derivatives not designated as hedging instruments are recorded in earnings in the period in which the change occurs.

The loss (gain) recognized in earnings related to derivatives not designated as hedging instruments was as follows:

Year Ended December 31,	2020			2019				2018
	INTEREST-	FOREIGN-		INTEREST-	FOREIGN-			INTEREST-	FOREIGN-
	RATE	EXCHANGE		RATE	EXCHANGE			RATE	EXCHANGE
	CONTRACTS	CONTRACTS		CONTRACTS	CONTRACTS			CONTRACTS	CONTRACTS
Truck, Parts and Other:
Cost of sales and revenues		$	.7		$	.5			$	(.3	)
Interest and other (income), net			2.3			5.4				6.9
Financial Services:
Interest and other borrowing expenses			9.4			(10.1	)			(14.9	)
Selling, general and administrative			.8			.1				1.7
		$	13.2		$	(4.1	)		$	(6.6	)