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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 12 Months Ended
Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Foreign Currency Option Contracts

We enter into foreign currency option contracts, both designated and non-designated, in order to manage the impact of fluctuations of foreign exchange on expected future purchases and related payables denominated in a foreign currency and to hedge the impact of fluctuations of foreign exchange on expected future sales and related receivables denominated in a foreign currency.

In September 2021, to economically hedge the foreign currency exposure associated with the planned payment of the euro-denominated purchase price for HRA Pharma, we entered into two non-designated currency option contracts with a total notional amount of $1.1 billion that were scheduled to mature in September 2022. In April 2022, due to market conditions, we unwound the two options and entered into two new undesignated options to economically hedge the purchase price for HRA Pharma for a total notional amount of $2.0 billion. All premiums associated with the HRA Pharma related currency options were settled in April 2022 for $37.1 million, and within Other (income) expense we recorded a $16.2 million and $20.9 million loss for the year ended December 31, 2022 and December 31, 2021, respectively. There was no gain or loss recorded for the years ended December 31, 2024 and December 31, 2023.

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.

In April 2022, we entered into the fixed-for-fixed cross currency interest rate swaps designated as net investment hedges to hedge the EUR currency exposure of our investment in European operations. The following are the total notional amounts and terms of the instruments:

•$300.0 million notional amount effective from April 14, 2022 through April 20, 2024;
•$700.0 million notional amount effective from April 27, 2022 through March 15, 2026; and
•$500.0 million notional amount effective from April 22, 2022 through June 15, 2030.

On October 25, 2022, we cash settled the April 2022 swaps for $98.8 million in proceeds recognized as part of cash flows for investing activities within the Statement of Cash Flows for the year ended December 31, 2022. On the
same day, we replaced the terminated instruments with new fixed-for-fixed cross currency interest rate swaps and designated the instruments as net investment hedges on our investment in European operations. The following are the total notional amounts and terms of the instruments:

•$700.0 million notional amount effective from October 25, 2022 through December 15, 2024;
•$700.0 million notional amount effective from October 25, 2022 through March 15, 2026; and
•$100.0 million notional amount effective from October 25, 2022 through June 15, 2030.

On November 21, 2023, we entered into fixed-for-fixed cross currency interest rate swaps designated as net investment hedges to hedge the EUR currency exposure of our investment in European operations. The following are the total notional amounts and terms of the instruments:

•$300.0 million notional amount outstanding from November 21, 2023 through April 20, 2027.

On May 7, 2024, we cash settled $547.5 million notional of the $700.0 million notional amount effective from October 25, 2022 through December 15, 2024. The settlement resulted in cash outflows of $45.8 million recognized as part of cash flows for investing activities within the Statement of Cash Flows for the year ended December 31, 2024.

On May 7, 2024, we entered into new fixed-for-fixed cross currency interest rate swaps designated as net investment hedges to hedge the EUR currency exposure of our investment in European operations. The following are the total notional amounts and terms of the instruments:

•$547.5 million notional amount outstanding from May 7, 2024 through April 20, 2027.

On August 2, 2024, we restructured the $152.5 million notional amount remaining from $700.0 million notional effective from October 25, 2022 to December 15, 2024 and extended the effective date to April 20, 2027. There was no cash impact associated with the restructuring.

In September 17, 2024, we entered into new fixed-for-fixed cross currency interest rate swaps designated as net investments hedges to hedge the EUR currency exposure of our investment in European operations. The following are the total notional amounts and terms of the instruments:

•$300.0 million notional amount outstanding from September 17, 2024 through September 30, 2028;
•$215.0 million notional amount outstanding from September 17, 2024 through June 15, 2030; and
•$200.0 million notional amount outstanding from September 17, 2024 through September 30, 2032.

On November 26, 2024, we cash settled the following cross currency swaps:

•$300.0 million notional amount effective from November 21, 2023 through April 20, 2027;
•$547.5 million notional amount effective from May 7, 2024 through April 20, 2027;
•$300.0 million notional amount effective from September 17, 2024 through September 30, 2028; and
•$185.5 million notional of the $700 million notional effective from October 25, 2022 through March 15, 2026.

Collectively, the transactions were settled for a net payment of $2.4 million as part of cash flows for investing activities within the Statement of Cash Flows for the year ended December 31, 2024.

On November 26, 2024, we restructured the following cross currency swaps to extend the effective date:

•$200.0 million notional amount originally effective from September 17, 2024 through September 30, 2032 now extended to March 30, 2033;
•$215.0 million notional amount originally effective from September 17, 2024 through June 15, 2030 now extended to December 15, 2030; and
•$100.0 million notional amount originally outstanding from October 25, 2022 through June 15, 2030 now extended to December 15, 2030.

In November, we entered into new fixed-for-fixed cross currency interest rate swaps designated as net investments hedges to hedge the EUR currency exposure of our investment in European operations. The following are the terms and notional amounts outstanding:
•$847.5 million notional amount effective from November 27, 2024 through April 20, 2027; and
•$300.0 million notional amount effective from November 27, 2024 through September 30, 2028.

As of December 31, 2024, the activity described above related to the fixed-for-fixed cross currency swaps designated as net investment hedges to manage the exposure to EUR resulted in instruments totaling $2.3 billion notional of which $515.0 million, $1.0 billion, $300.0 million, $315.0 million, and $200.0 million notional effective through March 2026, April 2027, September 2028, December 2030, and March 2033, respectively.

As designated net investment hedges, gains and losses related to the EUR spot exchange rate are deferred within the Cumulative Translation Adjustment, a component of AOCI, and recognized in the Statement of Operations when the hedged EUR net investment is substantially liquidated. Gains and losses on excluded components (e.g., interest differentials) will be recorded in Interest expense, net on a systematic and rational basis.

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.

In April 2022, to economically hedge the interest rate risk of the Senior Secured Credit Facilities (as defined in Note 12), we entered into five variable-to-fixed interest rate swap agreements. Three of the interest rate swaps were designated as cash flow hedges to fix the interest rate on a substantial portion of the Term Loan B Facility (as defined in Note 12). The interest rate swaps cover an interest period ranging from June 1, 2022, through April 1, 2029, on notional balances that decline from $1.0 billion to $812.5 million over the term. The other two interest rate swaps were designated as cash flow hedges to fix the interest rate on a substantial portion of the Term Loan A Facility (as defined in Note 12). The interest rate swaps covered an interest period ranging from June 1, 2022, through April 1, 2027, on notional balances that decline from $487.5 million to $387.5 million over the term.

In November 2023, to economically hedge the interest rate risk of the $300 million Term B Loan add-on (as defined in Note 12), we entered into four variable-to-fixed interest rate swap agreements. The interest rate swaps were designated as cash flow hedges to fix the interest rate on a substantial portion of the Term B Loans. In September 2024, we elected to fully de-designate these four interest rate swap agreements and discontinued hedge accounting as a result of the reduction in our variable rate debt (refer to Note 12), and entered into one additional undesignated fixed-to-variable interest rate swap agreement to offset the de-designated interest rate swap agreements. As a result, the $14.4 million loss reported in AOCI related to the de-designated interest rate swap agreements was reclassified into earnings immediately as the forecasted transaction (i.e. interest payments) will no longer occur. These five interest rate swap agreements are carried at fair value and are not designated as hedging instruments. Changes in fair value of the derivative instruments are recognized in other income (expense), net in the Consolidated Statement of Operations, in the current period, along with offsetting foreign currency gain or loss on the underlying assets or liabilities.

In May 2024, we cash settled the remaining notional of $712.5 million variable-to-fixed interest rate swap agreements at market rates. The termination resulted in cash proceeds of $41.2 million, for which the gain remains deferred in Other Comprehensive Income ("OCI") and will be recognized within Interest expense, net as interest is paid on the Senior Secured Credit Facilities. The proceeds are recognized as cash flows from operating activities within the Statement of Cash Flows for the year ended December 31, 2024.

Additionally, to economically hedge the interest rate risk of the Term Loan B Facility, we entered into new variable-to-fixed interest rate swap agreements to replace the terminated interest rate swaps during the second quarter of 2024. The interest rate swaps were designated as cash flow hedges to fix the interest rate on a substantial portion of the Term Loan B Facility. The interest rate swaps cover an interest period ranging from May 9, 2024, through April 1, 2029, on notional balances of $712.5 million over the term.

As a designated cash flow hedge, gains and losses will be deferred in AOCI and recognized within Interest expense, net when interest is paid on the Senior Secured Credit Facilities.
Other Hedging Instruments

On September 17, 2024, we designated €350.0 million of the 2032 Notes (as defined in Note 12) as a net investment hedge on our investment in European operations.

As a designated net investment hedge, gains and losses related to the EUR spot exchange rate will be deferred within the Cumulative Translation Adjustment, a component of AOCI, and recognized in the Statement of Operations when the hedged EUR net investment is substantially liquidated.

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.

Notional amounts of foreign currency forward contracts were as follows (in millions):
Year Ended
December 31, 2024December 31, 2023
European Euro (EUR)$54.9 $79.9 
British Pound (GBP)101.3 72.4 
Swedish Krona (SEK)66.5 36.5 
United States Dollar (USD)97.9 22.1 
Chinese Yuan (CNH)31.9 14.1 
Canadian Dollar (CAD)35.5 7.1 
Danish Krone (DKK)57.8 5.9 
Norwegian Krone (NOK)6.8 4.4 
Hungarian Forint (HUF)6.3 3.9 
Polish Zloty (PLZ)26.7 3.8 
Other(1)
16.9 3.5 
Total$502.5 $253.6 
(1) Number consists of various currencies notional amounts, none of which individually exceed $10.0 million in either year presented.
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 derivative instruments were as follows (in millions):
Year Ended
Balance Sheet Location December 31, 2024December 31, 2023
Designated derivative assets:
Foreign currency forward contractsPrepaid expenses and other current assets$2.1 $— 
Cross-currency swapsOther non-current assets14.2 — 
Interest rate swap agreements Other non-current assets9.3 30.5 
Foreign currency forward contracts Other non-current assets— 0.4 
Total designated derivative assets$25.6 $30.9 
Non-designated derivative assets:
Foreign currency forward contracts Prepaid expenses and other current assets$3.4 $0.2 
Total non-designated derivatives$3.4 $0.2 
Designated derivative liabilities:
Foreign currency forward contractsOther accrued liabilities $4.1 $— 
Cross-currency swapsOther accrued liabilities — 75.1 
Cross-currency swapsOther non-current liabilities46.8 96.9 
Interest rate swap agreementsOther non-current liabilities9.0 11.7 
Total designated derivative liabilities$59.9 $183.7 
Non-designated derivative liabilities:
Foreign currency forward contractsOther accrued liabilities $1.5 $2.7 
Interest rate swap agreementsOther non-current liabilities13.6 — 
Total non-designated derivative liabilities$15.1 $2.7 

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 DerivativesIncome Statement LocationDecember 31, 2024December 31, 2023December 31, 2022
Foreign currency forward contractsOther (income) expense, net$(3.4)$(4.0)$8.2 
Interest expense, net — (1.5)(2.0)
$(3.4)(5.5)$6.2 
Foreign currency optionsOther (income) expense, net$— $— $16.2 
The following tables summarize the effect of derivative instruments designated as hedging instruments in AOCI (in millions):

Gain or (Loss) Reclassified from AOCI into Earnings
Related to Amounts Included in Effectiveness TestingRelated to Amounts Excluded from
Effectiveness Testing
Amount of Gain or (Loss) Recognized in OCI(1)
Location of Gain or (Loss)
Amount Reclassified(2)
Location of Gain or (Loss)
Amount Reclassified(2)
Year Ended December 31, 2024
Cash flow hedges
Interest rate swap agreements44.1 Interest expense, net31.8 Interest expense, net— 
Foreign currency forward contracts(2.1)Net sales(0.4)Net sales0.1 
Cost of sales0.1 Cost of sales— 
Other (income) expense, net(0.2)
Total Cash flow hedges$42.0 $31.5 $(0.1)
Net investment hedges
Cross-currency swaps$116.9 Interest expense, net$28.9 
Euro Notes Due 2032$24.6 
Total Net investment hedges$141.5 
Year Ended December 31, 2023
Cash flow hedges
Treasury locks$— Interest expense, net$(0.1)Interest expense, net$— 
Interest rate swap agreements(31.7)Interest expense, net23.5 Interest expense, net— 
Foreign currency forward contracts(0.5)Net sales(0.1)Net sales0.6 
Cost of sales0.3 Cost of sales0.3 
Other (income) expense, net(0.3)
Total Cash flow hedges$(32.2)$23.6 $0.6 
Net investment hedges
Cross-currency swaps$(75.9)Interest expense, net$26.0 
Year Ended December 31, 2022
Cash flow hedges
Treasury locks$— Interest expense, net$(0.1)Interest expense, net$— 
Interest rate swap agreements50.5 Interest expense, net4.6 Interest expense, net— 
Foreign currency forward contracts4.1 Net sales1.6 Net sales(0.5)
Cost of sales(4.8)Cost of sales(0.2)
Other (income) expense, net(1.4)
Total Cash flow hedges$54.6 $1.3 $(2.1)
Net investment hedges
Cross-currency swaps$5.3 Interest expense, net$(17.2)
(1) Net income of $29.1 million is expected to be reclassified out of AOCI into earnings during 2025.
(2) For additional details about the effect of the amounts reclassified from AOCI refer to Note 16.
The classification and amount of gain/(loss) recognized in earnings on fair value and hedging relationships were as follows (in millions):
Net SalesCost of SalesInterest Expense, netOther (Income) Expense, net
Year Ended December 31, 2024
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
$4,373.4 $2,830.7 $187.8 $(0.9)
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings$(0.4)$0.1 $— $— 
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach$0.1 $— $— $(0.2)
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings$— $— $31.8 $— 
Year Ended December 31, 2023
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
$4,655.6 $2,975.2 $173.8 $(10.4)
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings$(0.1)$0.3 $— $— 
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach$0.6 $0.3 $— $(0.3)
Treasury locks
Amount of gain or (loss) reclassified from AOCI into earnings$— $— $(0.1)$— 
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings$— $— $23.5 $— 
Year Ended December 31, 2022
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$4,451.6 $2,996.2 $156.0 $53.1 
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$1.6 $(4.8)$— $— 
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach$(0.5)$(0.2)$— $(1.4)
Treasury locks
Amount of gain or (loss) reclassified from AOCI into earnings$— $— $(0.1)$— 
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings$— $— $4.6 $— 

Net foreign exchange losses totaled $6.5 million, $1.0 million, and $59.9 million for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively. Therein, 2022 included $16.2 million of loss for the change in fair value of the option contracts to hedge the foreign currency exposure of the euro-denominated purchase price for HRA Pharma.