In the normal course of business, the Company is exposed to risks relating to changes in interest rates, foreign currency exchange rates and commodity prices. Derivative financial instruments, such as interest rate swaps, net investment hedges, foreign currency exchange forward contracts and commodities derivative contracts are used to manage the risks associated with changes in the conditions of those markets. All derivatives are recognized in the Condensed Consolidated Balance Sheets at fair value. The counterparties to the Company’s derivative agreements are primarily major international financial institutions. The Company continually monitors its derivative positions and the credit ratings of its counterparties and does not anticipate nonperformance on their part.

The Company uses interest rate swaps and cross-currency swaps to reduce its exposure to interest rate risk and foreign currency risk. The Company has designated its interest rate swaps as cash flow hedges and its cross-currency swaps as net investment hedges of the foreign currency exposure of a portion of its net investment in certain euro functional subsidiaries. These swaps, as amended from time to time, effectively convert the Company's term loans under the Credit Agreement, which are U.S. dollar denominated debt obligations, into fixed-rate euro-denominated debt through their respective expiration dates.

In June 2023, the Company entered into interest rate swaps and cross-currency swaps to effectively convert the $150 million of incremental term loans A from U.S. dollar denominated debt obligations into fixed-rate euro-denominated debt through January 2026.

In March 2023, the Company terminated and replaced $360 million of its interest rate swaps and cross-currency swaps with swaps that mature in January 2026; which date is concurrent with the maturity date of the Company's term loans to which they relate. The fair value of the interest rate swaps on the date of termination was $6.8 million and the amount recorded in "Accumulated other comprehensive loss" is being amortized as a reduction to "Interest expense, net" in the Condensed Consolidated Statements of Operations from March 2023 through January 2024. The fair value in "Accumulated other comprehensive loss" for the terminated cross-currency swaps will remain until the hedged net investment is sold or liquidated.

The total notional value of the interest rate swaps and cross-currency swaps held at June 30, 2023 and December 31, 2022 was approximately $1.26 billion and $1.11 billion, respectively. As of June 30, 2023, $358 million in notional value matures in January 2024, $392 million in January 2025 and $508 million in January 2026.

The proceeds from these contracts are reflected as "Cash flows from operating activities" in the Condensed Consolidated Statement of Cash Flows. Changes in the fair value of interest rate swaps are recorded in "Accumulated other comprehensive loss" and reclassified to "Interest expense, net" in the Condensed Consolidated Statements of Operations as the underlying hedged item affects earnings. Changes in the fair value of cross-currency swaps are recorded in "Foreign currency translation" in "Accumulated other comprehensive loss."

The net result of these hedges, excluding the reduction to interest expense from the terminated interest rate swaps discussed above, is an interest rate of approximately 2.9% at June 30, 2023, which could vary in the future due to changes in the euro and the U.S. dollar exchange rate. The fair value of the interest rate swaps was a net asset of $43.3 million and $47.3 million at June 30, 2023 and December 31, 2022, respectively. The fair value of the cross-currency swaps was a net asset of $40.2 million and $70.4 million at June 30, 2023 and December 31, 2022, respectively.

For the three and six months ended June 30, 2023, these interest rate swaps and cross-currency swaps were deemed highly effective. The Company expects to reclassify a $32.2 million benefit from "Accumulated other comprehensive loss" to "Interest expense, net" in the Condensed Consolidated Statements of Operations within the next twelve months.

The Company conducts a significant portion of its business in currencies other than the U.S. dollar and certain subsidiaries conduct business in currencies other than their functional currency, which is typically their local currency. As a result, the Company’s operating results are impacted by foreign currency exchange rate volatility.

At June 30, 2023, the Company held foreign currency forward contracts to purchase and sell various currencies to mitigate foreign currency exposure primarily with the U.S. dollar, euro and British pound. The Company has not designated any foreign currency exchange forward contracts as eligible for hedge accounting and, as a result, changes in the fair value of foreign currency forward contracts are recorded in the Condensed Consolidated Statements of Operations as "Other (expense) income, net." The total notional value of foreign currency exchange forward contracts held at June 30, 2023 and December 31, 2022 was approximately $104 million and $105 million, respectively, with settlement dates generally within one year. The fair value of the foreign currency forward contracts was an immaterial net current asset and a $0.3 million net current liability at June 30, 2023 and December 31, 2022, respectively.

As part of its risk management policy, the Company enters into commodity derivative contracts for the purpose of mitigating its exposure to fluctuations in prices of certain metals used in the production of its finished goods. The Company held derivative contracts to purchase and sell various metals, primarily tin and silver, for a notional amount of $49.9 million and $45.7 million at June 30, 2023 and December 31, 2022, respectively. The fair value of the metals derivative contracts was a net current liability of $0.2 million and $2.5 million at June 30, 2023 and December 31, 2022, respectively. Substantially all contracts outstanding at June 30, 2023 have delivery dates within one year. The Company has not designated these derivatives as hedging instruments and, accordingly, records changes in their fair values in the Condensed Consolidated Statements of Operations as "Other (expense) income, net."


(dollars in millions)	Balance sheet location	Classification	June 30, 2023		December 31, 2022
Asset Category
Foreign exchange contracts	Other current assets	Level 2	$	0.1	$	0.2
Metals contracts	Other current assets	Level 2	1.7		2.5
Interest rate swaps	Other current assets	Level 2	32.2		32.7
Cross-currency swaps	Other current assets	Level 2	27.4		26.1

Interest rate swaps	Other assets	Level 2	11.1		14.6
Cross-currency swaps	Other assets	Level 2	18.2		44.3

Available-for-sale debt securities	Other assets	Level 3	13.9		11.5
Total			$	104.6	$	131.9

Liability Category
Foreign exchange contracts	Accrued expenses and other current liabilities	Level 2	$	0.1	$	0.5
Metals contracts	Accrued expenses and other current liabilities	Level 2	1.9		5.0




Cross-currency swaps	Other liabilities	Level 2	5.4		—

Total			$	7.4	$	5.5

The fair values of Level 1 and Level 2 derivative assets and liabilities are determined using pricing models based upon observable market inputs, such as market spot and futures prices on over-the-counter derivative instruments, market interest rates and consideration of counterparty credit risk. Level 3 investments are valued using a probability weighted methodology based on possible outcomes of potential liquidity events. Significant assumptions include the enterprise valuation, the timing and type of liquidation events and the risk-free interest rate.

The carrying value and estimated fair value of the Company’s long-term debt totaled $2.04 billion and $1.96 billion, respectively, at June 30, 2023. At December 31, 2022, the carrying value and estimated fair value totaled $1.90 billion and $1.80 billion, respectively. The carrying values noted above include unamortized discounts and debt issuance costs. The estimated fair value of long-term debt is measured using quoted market prices for similar instruments at the reporting date multiplied by the gross carrying amount of the related debt, which excludes unamortized discounts and debt issuance costs. Such instruments are valued using Level 2 inputs.