XML 58 R22.htm IDEA: XBRL DOCUMENT v3.26.1
Derivative and hedging activities
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative and hedging activities
14.    Derivative and hedging activities
Hedging instruments:
We engage in hedging activities to reduce our exposure to foreign currency exchange rates and interest rates. Our hedging activities are designed to manage specific risks according to our strategies, as summarized below, which may change from time to time. Our hedging activities consist of the following:
•Economic hedges — We are exposed to changes in foreign currency exchange rates on certain of our euro-denominated term loans and notes that move inversely from our portfolio of euro-denominated intercompany loans. The currency effects for these non-derivative instruments are recorded through earnings in the period of change and substantially offset one another;
•Other hedging activities — Certain of our subsidiaries hedge short-term foreign currency denominated business transactions, external debt and intercompany financing transactions using foreign currency forward contracts. These activities were not material to our consolidated financial statements.
Cash flow hedges of interest rate risk
Our objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an immaterial amount will be reclassified as an increase to interest expense.
During the quarter ended December 31, 2025, the hedging relationship for the $100.0 million interest rate swap became ineffective because the forecasted transaction was deemed no longer probable of occurring. As a result, hedge accounting was discontinued, and an immaterial gain was reclassified from AOCI into earnings. Following the discontinuation of hedge accounting, we terminated the interest rate swap and received an immaterial amount of cash proceeds.
As of March 31, 2026, we had no outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk.
For all periods presented, the effects of cash flow hedge accounting on AOCI and the statements of operations were immaterial.
Net investment hedges
We are exposed to foreign currency exchange rate fluctuations on the investments we hold in foreign entities, specifically related to the risk of changes in the EUR-USD exchange rates affecting our net investment in EUR-functional-currency consolidated subsidiaries.
For derivatives designated as net investment hedges, gains and losses are recorded in AOCI as part of the cumulative translation adjustment. These amounts are reclassified from AOCI into earnings only when the hedged net investment is sold or substantially liquidated.
As of March 31, 2026, we had the following outstanding foreign currency derivatives that were used to hedge a portion of our net investment in foreign operations:
(value in millions)
Foreign currency derivative
Number of instruments
Notional sold
Notional purchased
Cross-currency swaps
3 €732.1 $750.0 
We previously held a cross-currency swap with a notional amount of $750.0 million, which was scheduled to mature in April 2025. In April 2025, prior to maturity, we executed a transaction to amend and extend the original swap. The liability position of the original cross-currency swap was blended and rolled into three separate cross-currency swap agreements, each with a notional amount of $250.0 million, maturing in April 2027, April 2028, and April 2029, respectively.
Our cross-currency swaps involve the receipt of functional-currency fixed-rate amounts from a counterparty in exchange for making foreign-currency fixed-rate payments over the life of the agreement.
Effect of net investment hedges on AOCI and the income statement
The table below presents the effect of our net investment hedges on AOCI and the statement of operations for the three months ended March 31, 2026 and March 31, 2025.
Effect of Net Investment Hedges on AOCI and the Income Statement
(in millions)
Hedging relationships
Amount of gain or (loss) recognized in OCI on Derivative
Location of gain or (loss) recognized in income on Derivative (amount excluded from effectiveness testing)
Amount of gain or (loss) recognized in income on Derivative (amount excluded from effectiveness testing)
Three months ended March 31,
Three months ended March 31,
2026
2025
2026
2025
Cross-currency swaps$20.8 $(30.4)
Interest expense, net
$1.9 $3.2 
Total$20.8 $(30.4)$1.9 $3.2 
The Company did not reclassify any other deferred gains or losses related to cash flow hedges from accumulated other comprehensive income (loss) to earnings for the three months ended March 31, 2026 and March 31, 2025 other than those mentioned above.
The table below presents the fair value of our derivative financial instruments as well as their classification on the Balance Sheet as of March 31, 2026 and December 31, 2025:
Derivative liabilities
March 31, 2026
December 31, 2025
(in millions)
Balance sheet location
Fair value
Balance sheet location
Fair value
Derivatives designated as hedging instruments:
Foreign exchange products
Other current liabilities
(87.2)
Other current liabilities
(106.1)
Total
$(87.2)$(106.1)
Non-derivative financial instruments which are designated as hedging instruments:
In November 2025, we designated €144.0 million of our outstanding €400.0 million 3.875% senior Euro unsecured notes as a hedge of our net investment in certain European operations. In March 2026, we de‑designated this hedge and immediately re‑designated €57.0 million of the €400.0 million 3.875% senior Euro unsecured notes as a hedge of our net investment in certain European operations.
For instruments that are designated and qualify as net investment hedges, remeasurement gains or losses on the foreign-currency denominated debt are recorded as a component of AOCI. Net investment hedge effectiveness is assessed based on changes in the spot rate of the foreign currency denominated debt. The critical terms of the foreign currency notes match the portion of the net investments designated as being hedged. For all periods presented, the net investment hedge was equal to the designated portion of our European operations and was considered perfectly effective.
The accumulated gain related to the foreign currency denominated debt designated as a net investment hedge, classified within the foreign currency translation adjustment component of AOCI, was $6.1 million and $3.0 million as of March 31, 2026 and December 31, 2025, respectively.
The amount of (gain) loss related to the foreign currency denominated debt designated as a net investment hedge, classified within the foreign currency translation adjustment component of other comprehensive income or loss for the three months ended March 31, 2026 and March 31, 2025 are presented below:
(in millions)
Three months ended March 31,
2026
2025
Net investment hedges$(3.1)$—