We use derivatives as part of our normal business operations to manage our exposure to fluctuations in interest rates, foreign currency, commodity price risk and for other strategic purposes related to our core business. We have established policies and procedures that govern the risk management of these exposures. Our primary objective in managing these exposures is to decrease the volatility of cash flows affected by changes in the underlying rates and prices.

To achieve our objectives, we enter into a variety of financial derivatives, including foreign currency exchange, commodity, interest rate, cross currency swaps as well as options. We also enter into physical hedging agreements directly with our suppliers to manage our exposure to certain commodities.

While, by policy, the counterparties to any of the financial derivatives we enter into are major institutions with investment grade credit ratings of at least A- by Standard & Poor's (or the equivalent) or A3 by Moody's, we are exposed to credit-related losses in the event of non-performance by counterparties. This credit risk is generally limited to the unrealized gains in such contracts, should any of these counterparties fail to perform as contracted.

We have established a counterparty credit policy and guidelines that are monitored and reported to management to assist in managing this risk. As an additional measure, we utilize a portfolio of institutions either headquartered or operating in the same countries that we conduct our business. In calculating the fair value of our derivative balances, we also record an adjustment to recognize the risk of counterparty credit and our own non-performance risk, as appropriate.

We base the fair value of our derivative instruments upon market rates and prices. The volatility of these rates and prices are dependent on many factors that cannot be forecasted with reliable accuracy. The current fair values of our contracts could differ significantly from the cash settled values with our counterparties. As such, we are exposed to price risk related to

We may be forced to cash settle all or a portion of our derivative contracts before the expected settlement date upon the occurrence of certain contractual triggers including a change of control, termination event or other breach of agreement. This could have a negative impact on our liquidity. For derivative contracts that we have designated as hedging instruments, early cash settlement would result in the timing of our hedge settlement not being matched to the cash settlement of the forecasted transaction or firm commitment. We may also decide to cash settle all or a portion of our derivative contracts before the expected settlement date through negotiations with our counterparties, which could also impact our cash position.

Due to the nature of our counterparty agreements, we are not able to net positions with the same counterparty across business units. Thus, in the event of default, we may be required to early settle all out-of-the-money contracts, without the benefit of netting the fair value of any in-the-money positions against this exposure.

We do not receive and are not required to post collateral unless a change of control event occurs. This termination event would give either party the right to early terminate all outstanding swap transactions in the event that the other party consolidates, merges with, or transfers all or substantially all of its assets to, another entity, and the creditworthiness of the surviving entity that has assumed such party's obligations is materially weaker than that of such party. As of December 31, 2022, we did not have any collateral posted with any of our counterparties.

Our foreign currency forwards and our forward starting interest rate swaps are designated in hedging relationships as cash flow hedges. Prior to settlements discussed below, our interest rate swaps were designated as fair value hedges and our cross currency swaps were designated as net investment hedges. In certain situations, we may execute derivatives that do not qualify for, or we do not otherwise seek, hedge accounting but are determined to be important for managing risk. For example, our commodity swaps and commodity options are not designated in hedge accounting relationships. These outstanding economic hedges are measured at fair value on our consolidated balance sheets with changes in fair value recorded in earnings. We have historically elected to apply the NPNS exemption to certain contracts, as applicable. These contracts are typically transacted with our suppliers and include risk management features that allow us to fix the price on specific volumes of purchases for specified delivery periods. We also consider whether any provisions in our contracts represent embedded derivative instruments as defined in authoritative accounting guidance and apply the appropriate accounting.

We formally document all relationships receiving hedge accounting treatment between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking hedge transactions pursuant to prescribed guidance. We also formally assess effectiveness both at the hedge's inception and on an ongoing basis, specifically whether the derivatives that are used in hedging transactions have been highly effective in mitigating the risk designated as being hedged and whether those hedges may be expected to remain highly effective in future periods. Specific to net investment hedges, we have elected to use the spot-to-spot methodology to assess effectiveness.

We discontinue hedge accounting prospectively when (1) the derivative is no longer highly effective in offsetting changes in the cash flows of a forecasted future transaction; (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; (4) management determines that designating the derivative as a hedging instrument is no longer appropriate; or (5) management decides to cease hedge accounting.

When we discontinue hedge accounting prospectively, but it continues to be probable that the forecasted transaction will occur in the originally expected period, the existing gain or loss on the derivative remains in AOCI for cash flow hedges and net investment hedges or in the carrying value of the hedged item for fair value hedges and is reclassified into earnings when the forecasted transaction affects earnings. However, if it is probable that a forecasted transaction will no longer occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gains and losses in AOCI are recognized immediately in earnings. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, we carry the derivative at its fair value on the consolidated balance sheets until maturity, recognizing future changes in the fair value in current period earnings.

In 2016, we issued EUR 800 million senior notes maturing July 15, 2024 to partially fund the Acquisition. Concurrent with the issuance of these notes, we simultaneously designated the principals as net investment hedges of our investment in our Europe business in order to hedge a portion of the foreign currency translational impacts and, accordingly, record the changes in the carrying value due to fluctuations in the spot rate to AOCI. See Note 9, "Debt" for further discussion.

In 2019, we entered into cross currency swap agreements having a total notional value of approximately EUR 353 million ($400 million upon execution) in order to hedge a portion of the foreign currency translational impacts of our European investment. Upon repayment of the $1.0 billion 2.1% senior notes at maturity in July 2021, we settled the associated cross currency swap resulting in a net cash payment of $12.7 million, consisting of the final loss on the cross currency swap of $17.6 million partially offset by the final interest received. The settlement of these cross currency swaps were classified as investing activities in our consolidated statement of cash flows.

We had designated each of these cross currency swaps as net investment hedges and accordingly, recorded changes in fair value due to fluctuations in the spot rate to AOCI. The changes in fair value of the swaps attributable to changes other than those due to fluctuations in the spot rate were excluded from the assessment of hedge effectiveness and recorded to interest expense over the life of the hedge.

During 2018, we entered into forward starting interest rate swaps with a notional amount totaling 1.5 billion with termination dates of July 2021, May 2022 and July 2026. The swaps had effective dates mirroring the terms of the forecasted debt issuances. Under the agreements, we are required to early terminate these swaps at the time we expect to issue the related forecasted debt. We have designated these contracts as cash flow hedges. As a result, the unrealized mark-to-market gains or losses are recorded to AOCI until termination at which point the realized gain or loss of these swaps at issuance of the hedged debt are reclassified from AOCI and amortized to interest expense over the term of the hedged debt.

In June 2021, we early terminated our $250.0 million forward starting interest rate swap that was originally set to terminate in July 2021. This forward starting interest rate swap was rolled forward to May 2022 through a cashless settlement. The new May 2022 forward starting interest rate swap was incremental to our existing May 2022 forward starting interest rate swap that was executed in 2018, both of which were hedging our forecasted debt issuance expected to occur during 2022. In late April 2022, the forward starting interest rate swaps associated with the $500 million 3.5% notes that we repaid upon maturity on May 1, 2022 were terminated and settled. The immaterial loss on settlement of the swaps was recorded through interest expense during the second quarter of 2022.

In 2015 we entered into forward starting interest rate swaps with a notional of CAD 600 million in order to manage our exposure to the volatility of the interest rates associated with the future interest payments on the forecasted CAD debt issuances, which ultimately became the 2015 Notes and a portion of the 2016 Notes. The swaps had an effective date of September 2015 and a termination date of September 2025 mirroring the terms of the initially forecasted CAD debt issuance. Under these agreements we were required to early terminate these swaps at the approximate time we issued the previously forecasted debt. We had designated these contracts as cash flow hedges and accordingly, a portion of the CAD 39.2 million ($29.5 million at settlement) loss on the forward starting interest rate swaps is being reclassified from AOCI and amortized to interest expense over the remaining term of the 2015 Notes, repaid in September 2020, and over portions of the 2016 CAD Notes up to the full 10-year term of the interest rate swap agreements. The remaining unamortized portion of the loss in AOCI as of December 31, 2022 was $10.9 million.

We have financial foreign exchange forward contracts in place to manage our exposure to foreign currency fluctuations. We hedge foreign currency exposure related to certain royalty agreements, exposure associated with the purchase of production inputs and imports that are denominated in currencies other than the functional entity's local currency and other foreign exchanges exposures. These contracts have been designated as cash flow hedges of forecasted foreign currency transactions. We use foreign currency forward contracts to hedge these future forecasted transactions up to a 60 month horizon.

We have financial commodity swap and option contracts in place to hedge changes in the prices of natural gas, aluminum, including surcharges relating to our aluminum exposures, corn, barley and diesel. These contracts allow us to swap our floating exposure to changes in these commodity prices for a fixed rate. These contracts are not designated in hedge accounting relationships. As such, changes in fair value of these derivatives are recorded in cost of goods sold in the consolidated statements of operations. We hedge forecasted purchases of natural gas, aluminum, corn and diesel each up to 60 months out in the future for use in our supply chain, in line with our risk management policy. Further, we hedge forecasted purchases of barley based on crop year and physical inventory management. For purposes of measuring segment operating performance, the unrealized changes in fair value of the swaps not designated in hedge accounting relationships are reported in Unallocated outside of the segment specific operating results until such time that the exposure we are managing is realized. At that time, we reclassify the gain or loss from Unallocated to the operating segment, allowing our operating segments to realize the economic effects of the derivative without the resulting unrealized mark-to-market volatility.

In the fourth quarter of 2018, in connection with the formation of the Truss joint venture, as discussed further in Note 3, "Investments," our joint venture partner, HEXO, issued to our Canadian subsidiary warrants to purchase common shares of HEXO at any time during the three year period following the formation of the joint venture. The warrants to acquire common shares of HEXO expired unexercised on October 4, 2021. All changes in the fair value of the warrants subsequent to issuance and until expiration were recorded in other non-operating income (expense), net on the consolidated statements of operations.

We utilize market approaches to estimate the fair value of our derivative instruments by discounting anticipated future cash flows derived from the derivative's contractual terms and observable market interest, foreign exchange and commodity rates. The fair values of our derivatives also include credit risk adjustments to account for our counterparties' credit risk, as well as our own non-performance risk, as appropriate.

The tables below summarize our derivative assets and (liabilities) that were measured at fair value as of December 31, 2022 and December 31, 2021. See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for further discussion related to measuring the fair value of derivative instruments.


			Fair Value Measurements as of December 31, 2022
	Total as of December 31, 2022		Quoted prices in active markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
Interest rate swaps	$	40.0	$	—	$	40.0	$	—
Foreign currency forwards	7.6		—		7.6		—
Commodity swaps and options	69.0		—		69.0		—
Total	$	116.6	$	—	$	116.6	$	—


			Fair Value Measurements as of December 31, 2021
	Total as of December 31, 2021		Quoted prices in active markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
Interest rate swaps	(170.8)		—		(170.8)		—
Foreign currency forwards	(1.5)		—		(1.5)		—
Commodity swaps and options	300.9		—		300.9		—
Total	$	128.6	$	—	$	128.6	$	—

The following tables include the year-to-date results of our derivative activity in our consolidated balance sheets as of December 31, 2022 and December 31, 2021, and our consolidated statements of operations for the years ended December 31, 2022, December 31, 2021 and December 31, 2020.

Fair Value of Derivative Instruments in the Consolidated Balance Sheets (in millions)


	December 31, 2022
			Asset derivatives			Liability derivatives
	Notional amount		Balance sheet location	Fair value		Balance sheet location	Fair value
Derivatives designated as hedging instruments:

Interest rate swaps	$	1,000.0	Other non-current assets	40.0		Other liabilities	—
Foreign currency forwards	$	176.6	Other current assets	6.2		Accounts payable and other current liabilities	(0.1)
			Other non-current assets	1.6		Other liabilities	(0.1)
Total derivatives designated as hedging instruments				$	47.8		$	(0.2)
Derivatives not designated as hedging instruments:
Commodity swaps(1)	$	525.2	Other current assets	$	86.1	Accounts payable and other current liabilities	$	(14.1)
			Other non-current assets	7.4		Other liabilities	(10.4)
Commodity options(1)	$	19.7	Other current assets	0.8		Accounts payable and other current liabilities	(0.8)
Total derivatives not designated as hedging instruments				$	94.3		$	(25.3)


	December 31, 2021
			Asset derivatives			Liability derivatives
	Notional amount		Balance sheet location	Fair value		Balance sheet location	Fair value
Derivatives designated as hedging instruments:
Interest rate swaps	$	1,500.0	Other current assets	$	—	Accounts payable and other current liabilities	$	(67.7)
			Other non-current assets	—		Other liabilities	(103.1)
Foreign currency forwards	$	170.8	Other current assets	0.5		Accounts payable and other current liabilities	(2.4)
			Other non-current assets	0.6		Other liabilities	(0.2)
Total derivatives designated as hedging instruments				$	1.1		$	(173.4)
Derivatives not designated as hedging instruments:
Commodity swaps(1)	$	722.1	Other current assets	$	225.1	Accounts payable and other current liabilities	$	(1.1)
			Other non-current assets	77.1		Other liabilities	(0.3)
Commodity options(1)	$	68.2	Other current assets	1.0		Accounts payable and other current liabilities	(0.9)
Total derivatives not designated as hedging instruments				$	303.2		$	(2.3)

The Pretax Effect of Cash Flow Hedge Accounting on Other Comprehensive Income (Loss), Accumulated Other Comprehensive Income (Loss), and Income (Loss) (in millions):


Derivatives in cash flow hedge relationships	Amount of gain (loss) recognized in OCI on derivatives		Location of gain (loss) reclassified from AOCI into income	Amount of gain (loss) recognized from AOCI into income on derivative
For the year ended December 31, 2022
Forward starting interest rate swaps	$	198.9	Interest income (expense), net	$	(14.3)
Foreign currency forwards	10.8		Cost of goods sold	1.8
			Other non-operating income (expense), net	(0.4)
Total	$	209.7		$	(12.9)
For the year ended December 31, 2021
Forward starting interest rate swaps	$	50.7	Interest income (expense), net	$	(4.8)
Foreign currency forwards	0.4		Cost of goods sold	(3.5)
			Other non-operating income (expense), net	0.8
Total	$	51.1		$	(7.5)
For the year ended December 31, 2020
Forward starting interest rate swaps	$	(110.0)	Interest income (expense), net	$	(2.9)
Foreign currency forwards	(3.5)		Cost of goods sold	4.6
			Other non-operating income (expense), net	(1.2)
Total	$	(113.5)		$	0.5


Net investment hedge relationships	Amount of gain (loss) recognized in OCI		Location of gain (loss) recognized in income (amount excluded from effectiveness testing)	Amount of gain (loss) recognized in income (amount excluded from effectiveness testing)(1)
For the year ended December 31, 2022

EUR 800 million notes due 2024	53.2		Other non-operating income (expense), net	—
Total	$	53.2		$	—
For the year ended December 31, 2021
Cross currency swaps	$	8.8	Interest income (expense), net	$	6.1
EUR 800 million notes due 2024	67.7		Other non-operating income (expense), net	—
Total	$	76.5		$	6.1
For the year ended December 31, 2020
Cross currency swaps	$	(33.2)	Interest income (expense), net	$	14.2
EUR 800 million notes due 2024	(80.3)		Other non-operating income (expense), net	—
Total	$	(113.5)		$	14.2

The cumulative translation adjustments related to our net investment hedges remain in AOCI until the respective underlying net investment is sold or liquidated. During the years ended December 31, 2022, December 31, 2021 and December 31, 2020, respectively, we did not reclassify any amounts related to net investment hedges from AOCI into earnings.

We expect net gains of approximately $2 million (pretax) recorded in AOCI as of December 31, 2022 will be reclassified into earnings within the next 12 months. For derivatives designated in cash flow hedge relationships, the maximum length of time over which forecasted transactions are hedged as of December 31, 2022 is approximately 3 years, as well as those related to our forecasted debt issuances in 2026.


Derivatives not in hedging relationship	Location of gain (loss) recognized in income on derivative	Amount of gain (loss) recognized in income on derivative
For the year ended December 31, 2022
Commodity swaps	Cost of goods sold	$	42.6




Total		$	42.6
For the year ended December 31, 2021
Commodity swaps	Cost of goods sold	$	403.4
Commodity options	Cost of goods sold	0.1

Warrants	Other non-operating income (expense), net	(0.3)

Total		$	403.2
For the year ended December 31, 2020
Commodity swaps	Cost of goods sold	$	28.5


Warrants	Other non-operating income (expense), net	(2.4)

Total		$	26.1