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DERIVATIVES AND HEDGING TRANSACTIONS
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES AND HEDGING TRANSACTIONS DERIVATIVES AND HEDGING TRANSACTIONS
The Company uses foreign currency forward contracts, interest rate swap agreements, forward-starting interest rate lock contracts, cross-currency swap derivative contracts and foreign currency debt to manage risks associated with foreign currency exchange rates, interest rates and net investments in foreign operations. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. The Company records derivatives as assets and liabilities in the Consolidated Balance Sheets at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the Consolidated Statements of Cash Flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued.
The Company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. The Company monitors its exposure to credit risk by using credit approvals and credit limits and by selecting major global banks and financial institutions as counterparties. The Company does not anticipate nonperformance by any of these counterparties, and therefore, recording a valuation allowance against the Company’s derivative balance is not considered necessary.
Derivative Positions Summary
Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to net settle contracts with the same counterparties. These arrangements generally do not call for collateral and as of the applicable dates presented in the following table, no cash collateral had been received or pledged related to the underlying derivatives.
The respective net amounts are included in other current assets, other assets, other current liabilities and other liabilities on the Consolidated Balance Sheets.
The following table summarizes the gross fair value and the net value of the Company’s outstanding derivatives:
Derivative AssetsDerivative Liabilities
(millions)June 30
2026		December 31
2025		June 30
2026		December 31
2025
Derivatives designated as hedging instruments
Foreign currency forward contracts$2.4 $2.9 $5.2 $6.5 
Interest rate swap agreements- - 75.4 74.4 
Cross-currency swap derivative contracts25.0 5.8 168.1 185.0 
Derivatives not designated as hedging instruments
Foreign currency forward contracts16.1 14.5 15.4 13.8 
Cross-currency swap derivative contracts11.2 5.6 11.2 5.6 
Gross value of derivatives54.7 28.8 275.3 285.3 
Gross amounts offset in the Consolidated Balance Sheets(43.9)(23.3)(43.9)(23.3)
Net value of derivatives$10.8 $5.5 $231.4 $262.0 
The following table summarizes the notional values of the Company’s outstanding derivatives:
Notional Values
(millions)June 30
2026		December 31
2025
Foreign currency forward contracts$2,612 $2,525 
Interest rate swap agreements1,500 1,500 
Cross-currency swap derivative contracts4,934 4,151 
Cash Flow Hedges
The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including inventory purchases and intercompany royalty, intercompany loans, management fee and other payments. These forward contracts are designated as cash flow hedges. The changes in fair value of these contracts are recorded in accumulated other comprehensive income (loss) (“AOCI”) until the hedged items affect earnings, at which time the gain or loss is reclassified into the same line item in the Consolidated Statements of Income as the underlying exposure being hedged. Cash flow hedged transactions impacting AOCI are forecasted to occur within the next year. For forward contracts designated as hedges of foreign currency exchange rate risk associated with forecasted foreign currency transactions, the Company excludes the changes in fair value attributable to time value from the assessment of hedge effectiveness. The initial value of the excluded component (i.e., the forward points) is amortized on a straight-line basis over the life of the hedging instrument and recognized in the same line item in the Consolidated Statements of Income as the underlying exposure being hedged for intercompany loans. For all other cash flow hedge types, the forward points are mark-to-market monthly and recognized in the same line item in the Consolidated Statements of Income as the underlying exposure being hedged. The difference between fair value changes of the excluded component and the amount amortized in the Consolidated Statements of Income is recorded in AOCI.
Additionally, the Company utilizes forward-starting interest rate lock contracts to hedge the interest rate risk related to anticipated debt issuances. These instruments are designated as cash flow hedges. Amounts are recorded in AOCI related to these rate lock contracts and are reclassified into interest expense over the term of the related debt, subsequent to issuance.
During the six months ended June 30, 2026, the Company entered into forward-starting interest rate lock contracts to hedge the interest rate risk related to anticipated debt issuances for a total notional amount of $800 million. These forward-starting interest rate lock contracts were settled upon issuance of the $5.0 billion of public notes in May 2026. The balance in AOCI related to the rate lock contracts will be reclassified into interest expense over the term of the issued debt.

Fair Value Hedges
The Company manages interest expense using a mix of fixed and floating rate debt. To help manage exposure to interest rate movements and to reduce borrowing costs, the Company may enter into interest rate swaps under which the Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed upon notional principal amount. The mark-to-market of these fair value hedges is recorded as gains or losses in interest expense, net and is offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense, net. These fair value hedges are highly effective and thus, there is no impact on earnings due to hedge ineffectiveness.
In aggregate, the Company has entered into a series of interest rate swap agreements to convert $1.5 billion of its debt from a fixed interest rate to a floating interest rate. The fixed interest rates range from 1.3% to 4.8% and mature between 2026 and 2031. These interest rate swap agreements are designated as fair value hedges.
The following amounts were recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges:
Carrying amount of the hedged liabilitiesCumulative amount of the fair value hedging adjustment included in the carrying amount of the hedged liabilities
Line item in which the hedged item is includedJune 30
2026		December 31
2025		June 30
2026		December 31
2025
(millions)
Short-term debt$248.2 $- ($1.8)$- 
Long-term debt1,175.2 1,424.4 (77.7)(78.0)

Net Investment Hedges
Cross-currency swap derivative contracts
During the quarter ended June 30, 2026, the Company entered into Swiss Franc (“₣”) cross-currency swap derivative contracts with an aggregate notional amount of ₣500 million.
In aggregate, the Company maintains Swiss Franc (“₣”), Euro (“€”), Chinese Yuan (“CNH”), and Canadian dollar (“CAD”) cross-currency swap derivative contracts that are designated as net investment hedges of the Company’s related foreign currency denominated exposures from the Company’s investments in certain subsidiaries denominated in such functional currencies. As of June 30, 2026, the Company had ₣700 million ($866 million), €2,275 million ($2,599 million), CNH 3,984 million ($587 million) and CAD 280 million ($197 million) cross-currency swap derivative contracts outstanding as a hedge of the Company’s net investment in foreign operations.
The cross-currency swap derivative contracts exchange fixed-rate payments in one currency for fixed-rate payments in another currency. The changes in the spot rate of these instruments are recorded in AOCI in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in AOCI. Amounts excluded from the assessment of effectiveness are recognized in interest expense on a straight-line basis over the term of the hedge. The interest income or expense from these swaps are recorded in interest expense on the accompanying Consolidated Statements of Income consistent with the classification of interest expense attributable to the underlying debt.
The revaluation gains and losses on the Euronotes settled in 2025 and cross-currency swap derivative contracts, which are designated and effective as hedges of the Company’s net investments, have been included as a component of the cumulative translation adjustment account, and were as follows:
Second Quarter EndedSix Months Ended
June 30June 30
(millions)2026202520262025
Revaluation gain (loss), net of tax:
Euronotes$- ($41.2)$- ($34.1)
Cross-currency swap derivative contracts(8.8)(169.5)23.5 (206.4)
Total revaluation gain (loss), net of tax($8.8)($210.7)$23.5 ($240.5)
Derivatives Not Designated as Hedging Instruments
The Company uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries, primarily receivables and payables, which are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Therefore, changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities.

The Company also uses undesignated treasury rate lock contracts to mitigate our interest rate risk on future transactions. We recognize gains and losses resulting from interest rate movements in interest expense, net.

Effect of all Derivative Instruments on Income
The gain (loss) of all derivative instruments recognized in product and equipment cost of sales (“COS”), selling, general and administrative expenses (“SG&A”), and interest expense, net (“interest”) are summarized below.
Second Quarter Ended
June 30
20262025
(millions)COSSG&AInterestCOSSG&AInterest
Gain (loss) on derivatives designated as hedging instruments:
Foreign currency forward contracts
Amount of gain (loss) reclassified from AOCI to income($3.3)($0.9)$- $2.6 $0.2 $- 
Amount excluded from the assessment of effectiveness recognized in earnings based on changes in fair value- - - - - - 
Interest rate swap and forward-starting lock agreements
Amount of (loss) gain reclassified from AOCI to income- - - - - (0.4)
Gain (loss) on derivatives not designated as hedging instruments:
Foreign currency forward contracts
Amount of gain (loss) recognized in income- 2.4 - - (0.9)- 
Treasury rate lock contracts
Amount of gain (loss) recognized in income- - 5.5 - - - 
Total gain (loss) of all derivative instruments($3.3)$1.5 $5.5 $2.6 ($0.7)($0.4)
Six Months Ended
June 30
20262025
(millions)COSSG&AInterestCOSSG&AInterest
Gain (loss) on derivatives designated as hedging instruments:
Foreign currency forward contracts
Amount of gain (loss) reclassified from AOCI to income($4.0)($1.9)$- $4.7 $1.4 $- 
Amount excluded from the assessment of effectiveness recognized in earnings based on changes in fair value- - - - - - 
Interest rate swap and forward-starting lock agreements
Amount of (loss) gain reclassified from AOCI to income- - (0.2)- - (0.9)
Gain (loss) on derivatives not designated as hedging instruments:
Foreign currency forward contracts
Amount of gain (loss) recognized in income- 3.4 - - (1.4)- 
Treasury rate lock contracts
Amount of gain (loss) recognized in income- - 5.5 - - - 
Total gain (loss) of all derivative instruments($4.0)$1.5 $5.3 $4.7 $- ($0.9)
Subsequent Events
In July 2026, the Company entered into cross-currency swap derivative contracts with aggregate notional amounts of CNH 3,385 million, €150 million and CAD 120 million. These cross-currency swap derivative contracts are designated as net investment hedges of the Company’s Chinese Yuan, Euro and Canadian dollar denominated exposures from its investments in certain of its Chinese Yuan, Euro and Canadian dollar denominated functional currency subsidiaries.