The Company is exposed to certain market risks during the normal course of its business arising from adverse changes in interest rates and foreign currency exchange rates. The Company selectively uses derivative financial instruments (“derivatives”), including cross-currency interest rate swap and foreign currency forward contracts and interest rate swap and cap contracts, to manage the risks from fluctuations in foreign currency exchange rates and interest rates, respectively. The Company does not purchase or hold derivatives for trading or speculative purposes.

The Company’s exposure to interest rate risk results primarily from its variable-rate borrowings. The Company manages its debt centrally, considering tax consequences and its overall financing strategies. The Company manages its exposure to interest rate risk by using interest rate derivatives as cash flow hedges of variable rate debt in order to adjust the relative fixed and variable proportions.

A substantial portion of the Company’s operations is conducted by its subsidiaries outside of the United States in currencies other than the USD. Almost all of the Company’s non-U.S. subsidiaries conduct their business primarily in their local currencies, which are also their functional currencies. The USD, the EUR, GBP, Chinese Renminbi and Indian rupee are the principal currencies in which the Company and its subsidiaries enter into transactions. The Company is exposed to the impacts of changes in foreign

currency exchange rates on the translation of its non-U.S. subsidiaries’ assets, liabilities and earnings into USD. The Company manages this exposure by having certain U.S. subsidiaries borrow in currencies other than the USD or utilizing cross-currency interest rate swaps as net investment hedges.

The Company and its subsidiaries are also subject to the risk that arises when they, from time to time, enter into transactions in currencies other than their functional currency. To mitigate this risk, the Company and its subsidiaries typically settle intercompany trading balances at least quarterly. The Company also selectively uses forward currency contracts to manage this risk. These contracts for the sale or purchase of European and other currencies generally mature within one year.

The following table summarizes the notional amounts, fair values and classification of the Company’s outstanding derivatives by risk category and instrument type within the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022.


September 30, 2023
Derivative Classification		Notional Amount(1)		Fair Value(1) Other Current Assets		Fair Value(1) Other Assets		Fair Value(1) Accrued Liabilities		Fair Value(1) Other Liabilities
Derivatives Designated as Hedging Instruments
Interest rate swap contracts	Cash flow	$	528.5	$	11.5	$	5.4	$	—	$	—

Cross-currency interest rate swap contracts	Net investment	1,054.2		16.7		—		—		19.5
Derivatives Not Designated as Hedging Instruments
Foreign currency forwards	Fair value	$	7.3	$	—	$	—	$	—	$	—


December 31, 2022
Derivative Classification		Notional Amount(1)		Fair Value(1) Other Current Assets		Fair Value(1) Other Assets		Fair Value(1) Accrued Liabilities		Fair Value(1) Other Liabilities
Derivatives Designated as Hedging Instruments
Interest rate swap contracts	Cash Flow	$	528.5	$	8.8	$	5.3	$	—	$	—
Interest rate cap contracts	Cash flow	1,000.0		8.3		9.8		—		—
Cross-currency interest rate swap contracts	Net investment	1,054.2		17.7		—		—		28.7
Derivatives Not Designated as Hedging Instruments
Foreign currency forwards	Fair Value	$	7.3	$	—	$	—	$	—	$	—
Foreign currency forwards	Fair Value	15.8		—		—		—		—

(1)Notional amounts represent the gross contract amounts of the outstanding derivatives excluding the total notional amount of positions that have been effectively closed through offsetting positions. The net gains and net losses associated with positions that have been effectively closed through offsetting positions but not yet settled are included in the asset and liability derivatives fair value columns, respectively.

Payments of interest rate cap premiums are classified as financing cash flows in the Condensed Consolidated Statements of Cash Flows. All other cash flows related to derivatives are classified as operating cash flows in the Condensed Consolidated Statements of Cash Flows.

As of September 30, 2023, the Company was the fixed rate payor on two interest rate swap contracts that effectively fix the SOFR-based index used to determine the interest rates charged on a total of $528.5 million of the Company’s SOFR-based variable rate borrowings. These contracts carry a fixed rate of 3.2% and expire in 2025. These swap agreements qualify as hedging instruments and have been designated as cash flow hedges of forecasted SOFR-based interest payments. Based on SOFR-based swap yield curves as of September 30, 2023, the Company expects to reclassify gains of $11.5 million out of accumulated other comprehensive income (“AOCI”) into earnings during the next 12 months.

The Company was previously a party to interest rate cap contracts that effectively limited the SOFR-based interest rates charged on a portion of the Company’s variable rate borrowings to 4.0%. The Company and its counterparties terminated these contracts in August 2023. Prior to their termination, these cap contracts qualified as hedging instruments and were designated as cash flow hedges of forecasted interest payments. These forecasted interest payments are still expected to occur as specified in the Company’s hedge designations; therefore, the unrecognized gain at the time of termination will be reclassified into earnings over the remaining period of original term of the contracts, ending in June 2025. The unrecognized gain remaining in AOCI as of September 30, 2023 was $8.4 million, of which $6.1 million is expected to be reclassified into earnings during the next 12 months.

Gains on derivatives designated as cash flow hedges included in the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine month periods ended September 30, 2023 and 2022 are as presented in the table below.


	For the Three Month Period Ended September 30,				For the Nine Month Period Ended September 30,
	2023		2022		2023		2022
Gain recognized in OCI on derivatives	$	1.4	$	23.7	$	14.9	$	17.1
Gain (loss) reclassified from AOCI into income (effective portion)(1)	4.8		(2.4)		10.8		(2.5)

As of September 30, 2023, the Company was the fixed rate payor on two cross-currency interest rate swap contracts that replace a fixed rate of 3.2% on a total of $528.5 million with a fixed rate of 1.6% on a total of €500.0 million. These contracts expire in 2025. These contracts have been designated as net investment hedges of our Euro denominated subsidiaries and require an exchange of the notional amounts at maturity.

As of September 30, 2023, the Company entered into three cross-currency interest rate swap contracts where we receive SOFR on a total of $525.7 million and pay EURIBOR on a total of €500.0 million. These contracts expire in 2025. These contracts have been designated as net investment hedges of our Euro denominated subsidiaries and require an exchange of the notional amounts at maturity.

Gains on derivatives designated as net investment hedges included in the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine month periods ended September 30, 2023 and 2022 are as presented in the table below.


	For the Three Month Period Ended September 30,				For the Nine Month Period Ended September 30,
	2023		2022		2023		2022
Gain recognized in OCI on derivatives	$	35.0	$	65.9	$	22.9	$	71.9
Gain reclassified from AOCI into income (effective portion)(1)	4.5		5.6		14.7		5.7

The Company had one foreign currency forward contract outstanding as of September 30, 2023 with a notional amount of $7.3 million. This contract is used to hedge the change in fair value of recognized foreign currency denominated assets or liabilities caused by changes in currency exchange rates. The changes in the fair value of this contract generally offset the changes in the fair value of a corresponding amount of the hedged items, both of which are included within “Other operating expense, net” in the Condensed Consolidated Statements of Operations. The Company’s foreign currency forward contract is subject to master netting arrangements or agreements between the Company and each counterparty for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract with that certain counterparty. It is the Company’s practice to recognize the gross amounts in the Condensed Consolidated Balance Sheets. The amount available to be netted is not material.

The Company’s gains (losses) on derivative instruments not designated as accounting hedges and total net foreign currency gains (losses) for the three and nine month periods ended September 30, 2023 and 2022 were as follows.


	For the Three Month Period Ended September 30,				For the Nine Month Period Ended September 30,
	2023		2022		2023		2022
Foreign currency forward contracts gains (losses)	$	(0.1)	$	(0.1)	$	0.1	$	3.0
Total foreign currency transaction gains (losses), net	(1.1)		6.7		(1.0)		12.3

In February 2020, the Company designated its Euro Term Loan, which had a principal balance at that time of €601.2 million, as a hedge of the Company’s net investment in subsidiaries with a functional currency of euro. This loan was repaid in June 2022 and the hedge has been discontinued. The Company’s gains, net of income tax, associated with changes in the value of debt for the nine month period ended September 30, 2022 was $36.4 million.