DERIVATIVES |
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| DERIVATIVES | NOTE 12 — DERIVATIVES The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial in the three and nine months ended September 30, 2026 and 2025. The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at September 30, 2026. The Company does not expect any counterparties to fail to meet their obligations. Cash Flow Hedges Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $85,256 and $88,555 at September 30, 2026 and December 31, 2025, respectively. Net Investment Hedges The Company has foreign currency forward contracts and zero-cost collar contracts that qualify and are designated as net investment hedges. The dollar equivalent gross notional amount of the foreign currency forward contracts and zero-cost collar contracts were $279,192 and $337,659 at September 30, 2026 and December 31, 2025, respectively. Derivatives Not Designated as Hedging Instruments The Company has certain foreign exchange forward contracts that are not designated as hedges. These derivatives are held as economic hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $484,966 and $370,668 at September 30, 2026 and December 31, 2025, respectively. Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets consisted of the following:
The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following:
The effects of designated hedges on AOCI consisted of the following:
The Company expects a charge of $106 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized. The effects of designated hedges on the Company’s Consolidated Statements of Income consisted of the following:
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