The Company uses derivative financial instruments, including interest rate swaps, cross-currency swaps, forward contracts and net-zero-cost collar arrangements (combination of call and put option contracts) to mitigate a portion of its exposures to changes in interest rates, foreign currency exchange rates and precious metal prices.

Derivative Instruments Designated as Hedging Instruments. If a derivative instrument meets certain hedge accounting criteria, it is recorded on the Consolidated Balance Sheet at its fair value, as either an asset or a liability, with an offset to current or other comprehensive earnings, depending on whether the hedge is designated as one of the following on the date it is entered into:

The Company formally documents the nature of and relationships between the hedging instruments and hedged items for a derivative to qualify as a hedge at inception and throughout the hedged period. The Company also documents its risk management objectives, strategies for undertaking the various hedge transactions and method of assessing hedge effectiveness. Additionally, for hedges of forecasted transactions, the significant characteristics and expected terms of a forecasted transaction must be identified, and it must be probable that each forecasted transaction will occur. If it were deemed probable that the forecasted transaction would not occur, the gain or loss on the derivative financial instrument would be recognized in current earnings. Derivative financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedge instrument and the item being hedged, both at inception and throughout the hedged period.

Derivative Instruments Not Designated as Hedging Instruments. Derivative instruments which do not meet the criteria to be designated as a hedge are recorded on the Consolidated Balance Sheet at their fair values, as either assets or liabilities, with an offset to current earnings. The gains or losses on undesignated foreign exchange forward contracts substantially offset foreign exchange losses or gains on the underlying liabilities or transactions being hedged.

Interest Rate Swaps – In 2012, the Company entered into forward-starting interest rate swaps to hedge the impact of interest rate volatility on future interest payments associated with the anticipated incurrence of $250.0 million of debt which was incurred in July 2012. The Company accounted for the forward-starting interest rate swaps as cash flow hedges. The Company settled the interest rate swaps in 2012 and recorded a loss within accumulated other comprehensive loss. As of January 31, 2020, $16.1 million remains recorded as a loss in accumulated other comprehensive loss, which is being amortized over the term of the 2042 Notes to which the interest rate swaps related.

In 2014, the Company entered into forward-starting interest rate swaps to hedge the impact of interest rate volatility on future interest payments associated with the anticipated incurrence of long-term debt which was incurred in September 2014. The Company accounted for the forward-starting interest rate swaps as cash flow hedges. The Company settled the interest rate swaps in 2014 and recorded a loss within accumulated other comprehensive loss. As of January 31, 2020, $3.3 million remains recorded as a loss in accumulated other comprehensive loss, which is being amortized over the terms of the respective 2024 Notes or 2044 Notes to which the interest rate swaps related.

Cross-currency Swaps – In 2016, 2017 and 2019, the Company entered into cross-currency swaps to hedge the foreign currency exchange risk associated with Japanese yen-denominated and Euro-denominated intercompany loans. These cross-currency swaps are designated and accounted for as cash flow hedges. As of January 31, 2020, the notional amounts of cross-currency swaps accounted for as cash flow hedges and the respective maturity dates were as follows:



Cross-Currency Swap		Notional Amount
Effective Date	Maturity Date	(in millions)		(in millions)
July 2016	October 2024	¥	10,620.0	$	100.0
March 2017	April 2027	¥	11,000.0	$	96.1
May 2017	April 2027	¥	5,634.5	$	50.0
August 2019	August 2026	€	21.1	$	23.6

Foreign Exchange Forward Contracts – The Company uses foreign exchange forward contracts to offset a portion of the foreign currency exchange risks associated with foreign currency-denominated liabilities, intercompany transactions and forecasted purchases of merchandise between entities with differing functional currencies. The Company assesses hedge effectiveness based on the total changes in the foreign exchange forward contracts' cash flows. These foreign exchange forward contracts are designated and accounted for as either cash flow hedges or economic hedges that are not designated as hedging instruments.



(in millions)		Notional Amount		USD Equivalent
Derivatives designated as hedging instruments:
Japanese yen	¥	19,917.3	$	187.4
British pound	£	13.2		17.1
Derivatives not designated as hedging instruments:
U.S. dollar	$	130.0	$	130.0
Euro	€	6.8		7.6
Australian dollar	AU$	23.2		15.7
Czech koruna	CZK	142.7		6.1
Japanese yen	¥	2,320.5		21.2
New Zealand dollar	NZ$	10.2		6.8
Singapore dollar	S$	20.9		15.2
Chinese renminbi	CNY	361.2		51.6
Canadian dollar	CAD	15.9		12.2
Danish kroner	DKK	52.6		7.8
Korean won	KRW	29,019.0		24.8

Precious Metal Collars and Forward Contracts – The Company periodically hedges a portion of its forecasted purchases of precious metals for use in its internal manufacturing operations in order to manage the effect of volatility in precious metal prices. The Company may use either a combination of call and put option contracts in net-zero-cost collar arrangements ("precious metal collars") or forward contracts. For precious metal collars, if the price of the precious metal at the time of the expiration of the precious metal collar is within the call and put price, the precious metal collar expires at no cost to the Company. The Company accounts for its precious metal collars and forward contracts as cash flow hedges. The Company assesses hedge effectiveness based on the total changes in the precious metal collars and forward contracts' cash flows. As of January 31, 2020, the maximum term over which

the Company is hedging its exposure to the variability of future cash flows for all forecasted precious metals transactions is 18 months. As of January 31, 2020, there were precious metal derivative instruments outstanding for approximately 29,000 ounces of platinum, 557,000 ounces of silver and 84,000 ounces of gold.



	Year Ended January 31, 2020
(in millions)	Cost of sales			Interest expense and financing costs			Other expense, net			Other comprehensive loss, net of tax
Reported amounts of financial statement line items in which effects of cash flow hedges are recorded	$	1,662.1		$	38.5		$	3.8		$	(42.4	)
Derivatives in Cash Flow Hedging Relationships:
Foreign exchange forward contracts
Pre-tax gain recognized in OCI	—			—			—			5.4
Pre-tax gain reclassified from accumulated OCI into earnings	(4.1		)	—			—			4.1
Precious metal collars
Pre-tax gain reclassified from accumulated OCI into earnings	(0.3		)	—			—			0.3
Precious metal forward contracts
Pre-tax gain recognized in OCI	—			—			—			18.1
Pre-tax loss reclassified from accumulated OCI into earnings	2.8			—			—			(2.8		)
Cross-currency swaps
Pre-tax gain recognized in OCI	—			—			—			27.0
Pre-tax gain reclassified from accumulated OCI into earnings	—			(6.1		)	(0.1		)	6.2
Forward-starting interest rate swaps
Pre-tax loss reclassified from accumulated OCI into earnings	—			1.3			—			(1.3		)



	Year Ended January 31, 2019
(in millions)	Cost of sales			Interest expense and financing costs		Other expense, net			Other comprehensive loss, net of tax
Reported amounts of financial statement line items in which effects of cash flow hedges are recorded	$	1,631.1		$	39.7	$	7.1		$	(68.6	)
Derivatives in Cash Flow Hedging Relationships:
Foreign exchange forward contracts
Pre-tax gain recognized in OCI	—			—		—			5.8
Pre-tax gain reclassified from accumulated OCI into earnings	(2.6		)	—		—			2.6
Precious metal collars
Pre-tax gain reclassified from accumulated OCI into earnings	(0.6		)	—		—			0.6
Precious metal forward contracts
Pre-tax loss recognized in OCI	—			—		—			(7.2		)
Pre-tax loss reclassified from accumulated OCI into earnings	1.0			—		—			(1.0		)
Cross-currency swaps
Pre-tax gain recognized in OCI	—			—		—			0.3
Pre-tax gain reclassified from accumulated OCI into earnings	—			—		(0.4		)	0.4
Forward-starting interest rate swaps
Pre-tax loss reclassified from accumulated OCI into earnings	—			1.4		—			(1.4		)

The pre-tax gains or losses on derivatives not designated as hedging instruments were not significant for the years ended January 31, 2020 and 2019 and were included in Other expense, net. The Company expects approximately $6.7 million of net pre-tax derivative gains included in accumulated other comprehensive loss at January 31, 2020 will be reclassified into earnings within the next 12 months. The actual amount reclassified will vary due to fluctuations in foreign currency exchange rates and precious metal prices.

A number of major international financial institutions are counterparties to the Company's derivative financial instruments. The Company enters into derivative financial instrument agreements only with counterparties meeting certain credit standards (an investment grade credit rating at the time of the agreement) and limits the amount of agreements or contracts it enters into with any one party. The Company may be exposed to credit losses in the event of nonperformance by individual counterparties or the entire group of counterparties.