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. The counterparties to the Company’s derivative agreements are primarily major international financial institutions. The Company regularly monitors its derivative positions and the credit ratings of its counterparties and does not anticipate nonperformance on their part.

All derivatives are recognized in the Consolidated Balance Sheets at fair value. Realized gains and losses on foreign currency forward contracts, commodity derivative contracts and the net periodic payments from interest rate swaps and cross-currency swaps are accounted for in the Consolidated Statements of Cash Flows as "Operating activities."

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 effectively convert the Company’s outstanding term loans, which are U.S. dollar denominated debt obligations, into fixed-rate euro-denominated debt through their respective expiration dates.

In December 2023, in connection with the funding of the new term loans B-2, the Company terminated and monetized $865 million notional of its interest rate swaps and cross-currency swaps related to the term loans A and B-1 which were scheduled to mature in 2024 and 2026. The Company received $7.8 million upon the termination of the applicable interest rate swaps, which amount is reflected as "Cash flows from operating activities" in the Consolidated Statement of Cash Flows and recorded the benefit in “Accumulated other comprehensive loss.” A benefit of $4.0 million was previously recognized in 2023 while the remainder is being amortized as a reduction to “Interest expense, net” in the Consolidated Statement of Operations ($1.3 million through January 2024 and $2.5 million through January 2026). In addition, the Company received $18.6 million upon the termination of the applicable cross-currency swaps, which amount is included in "Other, net" in the Consolidated Statement of Cash Flows as a cash inflow from investing activities. The benefit will remain in “Accumulated other comprehensive loss” until the hedged net investment is sold or liquidated.

Simultaneously with the funding of the new term loans B-2, the Company entered into interest rate swaps and cross-currency swaps to effectively convert $760 million of the new term loans B-2, a U.S. dollar denominated debt obligation, into fixed-rate euro-denominated debt through December 2028. The balance of the term loans B-2, approximately $390 million, remains subject to existing swaps scheduled to mature in 2025.

The total notional value of the interest rate swaps and cross-currency swaps held at December 31, 2023 and 2022 was approximately $1.15 billion and $1.11 billion, respectively. As of December 31, 2023, approximately $390 million in notional value matures in January 2025 and the remaining balance in December 2028.

The net periodic payments from the interest rate swaps and cross-currency swaps, excluding the proceeds from the monetization of the cross-currency swaps discussed above, are reflected as "Cash flows from operating activities" in the 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 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 3.3% at December 31, 2023 on the term loans B-2, 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 $11.9 million and $47.3 million at December 31, 2023 and 2022, respectively. The fair value of the cross-currency swaps was a net asset of $4.8 million and $70.4 million at December 31, 2023 and 2022, respectively.

During 2023 and 2022, these interest rate swaps and cross-currency swaps were deemed highly effective. Excluding the reclassifications associated with the monetization of the terminated interest rate swaps discussed above, the Company expects to reclassify a benefit of $19.9 million from "Accumulated other comprehensive loss" to "Interest expense, net" in the 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 December 31, 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 Consolidated Statements of Operations as "Other (expense) income, net."

The total notional value of foreign currency exchange forward contracts held at December 31, 2023 and 2022 was approximately $93.9 million and $105 million, respectively, with settlement dates generally within one year. The fair value of the foreign currency forward contracts was a net current liability of $0.7 million and a $0.3 million at December 31, 2023 and 2022, respectively.

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 $63.8 million and $45.7 million at December 31, 2023 and 2022, respectively. The fair value of the metals derivative contracts was a net current liability of $1.2 million and $2.5 million at December 31, 2023 and 2022, respectively. Substantially all contracts outstanding at December 31, 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 Consolidated Statements of Operations as "Other (expense) income, net."

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis:


			December 31,
(dollars in millions)	Balance sheet location	Classification	2023		2022
Asset Category
Foreign exchange contracts	Other current assets	Level 2	$	0.2	$	0.2
Metals contracts	Other current assets	Level 2	0.5		2.5
Interest rate swaps	Other current assets	Level 2	19.9		32.7
Cross-currency swaps	Other current assets	Level 2	5.9		26.1
Interest rate swaps	Other assets	Level 2	4.3		14.6
Cross-currency swaps	Other assets	Level 2	9.6		44.3
Available-for-sale debt securities	Other assets	Level 3	14.2		11.5
Total			$	54.6	$	131.9

Liability Category
Foreign exchange contracts	Accrued expenses and other current liabilities	Level 2	$	0.9	$	0.5
Metals contracts	Accrued expenses and other current liabilities	Level 2	1.7		5.0

Cross-currency swaps	Accrued expenses and other current liabilities	Level 2	0.9		—
Interest rate swaps	Other liabilities	Level 2	12.3		—
Cross-currency swaps	Other liabilities	Level 2	9.8		—
Total			$	25.6	$	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 $1.93 billion and $1.89 billion, respectively, at December 31, 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

As a result of the goodwill impairment test conducted in the third quarter of 2023, the Industrial & Specialty segment recorded an impairment charge of $80.0 million to reduce the carrying value of the Graphics Solutions reporting unit to its estimated fair value. This measurement was performed on a non-recurring basis as of August 31, 2023 using significant unobservable inputs (Level 3), including the applicable discount rate (WACC) of 10.5% and the short and long-term projected cash flows, such as future growth rates, of the Graphics Solutions reporting unit. See Note 7, Goodwill and Intangible Assets, to the Consolidated Financial Statements for further information.