Derivative Instruments

3 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company enters into derivative instrument agreements, including forward foreign currency exchange contracts, interest rate swaps, and cross currency swaps to manage risk in connection with changes in foreign currency and interest rates. The Company hedges committed exposures and does not engage in speculative transactions. The Company only enters into derivative instrument agreements with counterparties who have highly rated credit.

As of June 30, 2023, the aggregate notional amount of the Company's outstanding interest rate contracts, cross currency swap contracts, EUR forward contract and CNY forward contracts were $571.9 million, $442.3 million, $321.7 million and $5.9 million (CNY40.4 million), respectively.

Changes in fair value of any forward contracts that are determined to be ineffective are immediately reclassified from OCI into earnings. There were no amounts recognized due to ineffectiveness during the three and six months ended June 30, 2023 and June 30, 2022.

The effects of fair value and cash flow hedge accounting on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the six months ended June 30, were as follows:



				2023					2022
(in thousands)				Cost of sales		Interest expense, net	Other & foreign exchange loss, net		Cost of sales	Interest expense, net	Other & foreign exchange loss, net
Total amounts of income and expense line items presented in the Condensed Consolidated Statement of Earnings in which the effects of fair value or cash flow hedges are recorded				$	591,669	(1,274)	$	(42)	590,688	(3,585)	(2,107)
The effects of fair value and cash flow hedging
	Gain or (loss) on cash flow hedging relationships
		Interest contracts:
			Amount of gain or (loss) reclassified from OCI to earnings	—		7,107	—		—	(2,978)	—
		Cross currency swap contract
			Amount of gain or (loss) reclassified from OCI to earnings	—		2,605	(5,244)		—	1,959	(29,124)
		Forward contract
			Amount of gain reclassified from OCI to earnings	80		—	—		163	—	—

The effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the three months ended June 30, 2023 and 2022 were as follows:


Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from OCI into Earnings	Gain (Loss) Reclassified from OCI into Earnings
(in thousands)	2023		2022			2023		2022
Interest rate contracts	$	10,589	$	8,681	Interest expense	$	3,911	$	(2,949)
Cross currency contracts	(5,739)		30,263		Interest expense	1,266		1,938
Forward contracts	(413)		—		FX gain (loss)	(3,429)		32,091
					Cost of goods sold	80		—
Total	$	4,437	$	38,944		$	1,828	$	31,080

The effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the six months ended June 30, 2023 and 2022 were as follows:


Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from OCI into Earnings	Gain (Loss) Reclassified from OCI into Earnings
(in thousands)	2023		2022			2023		2022
Interest rate contracts	$	6,546	$	6,876	Interest expense	$	7,107	$	(2,978)
Cross currency contracts	(8,019)		22,715		Interest expense	2,605		1,959
Forward contracts	(448)		$	—	FX gain (loss)	(5,244)		29,124
					Cost of goods sold	80		163
Total	$	(1,921)	$	29,591		$	4,548	$	28,268

For the three months ending June 30, 2023 losses on the net investment hedge, and June 30, 2022 gains on net investment hedge of $4.1 million and $18.1 million were included in OCI, respectively. For the three months ending June 30, 2023 and June 30, 2022, excluded gains of $1.3 million and $1.1 million were reclassified from OCI to interest expense, respectively.

For the six months ending June 30, 2023 losses on the net investment hedge, and June 30, 2022 gains on net investment hedge of $4.4 million and $11.3 million were included in OCI, respectively. For the six months ending June 30, 2023 and June 30, 2022, excluded gains of $2.5 million and $1.1 million were reclassified from OCI to interest expense, respectively.

As of June 30, 2023, the aggregate fair values of the Company’s derivative instruments on the Condensed Consolidated Balance Sheet were comprised of an asset of $37.9 million, of which $19.5 million is included in other current assets, and the balance of $18.4 million as other non-current assets, and of a liability of $18.9 million, of which $0.3 million is included in accrued liabilities and other current liabilities, and the balance of $18.6 million as deferred income tax and other long-term liabilities.