
8.	DERIVATIVES

Our business and financial results are affected by fluctuations in world financial markets, including interest rates and currency exchange rates. Our hedging policy has been developed to manage these risks to an acceptable level based on management’s judgment of the appropriate trade-off between risk, opportunity and cost. We do not hold financial instruments for trading or speculative purposes.

Currency forward contracts From time to time, we use foreign currency forward and option contracts to reduce the effects of fluctuations in exchange rates, primarily relating to the Mexican Peso, Euro, Brazilian Real, British Pound Sterling, Thai Baht, Swedish Krona, Chinese Yuan, Polish Zloty and Indian Rupee. As of June 30, 2017, we have currency forward and option contracts outstanding with a notional amount of $217.2 million that hedge our exposure to changes in foreign currency exchange rates for certain payroll expenses into the second quarter of 2020 and certain direct and indirect inventory and other working capital items into the first quarter of 2018.

Variable-to-fixed interest rate swap In the second quarter of 2017, we entered into a variable-to-fixed interest rate swap to reduce the variability of cash flows associated with interest payments on our variable rate debt. We have the following notional amounts hedged in relation to our variable-to-fixed interest rate swap: $750.0 million through May 2018, $600.0 million through May 2019, $450.0 million through May 2020 and $200.0 million through May 2021.

The following table summarizes the reclassification of derivative losses into net income from accumulated other comprehensive loss for those derivative instruments designated as cash flow hedges under Accounting Standards Codification 815 - Derivatives and Hedging (ASC 815):



		Loss Reclassified During												Loss Expected to
	Location of Loss	Three Months Ended						Six Months Ended						be Reclassified
	Reclassified into	June 30,						June 30,						During the
	Net Income	2017			2016			2017			2016			Next 12 Months
		(in millions)

Currency forward contracts	Cost of Goods Sold	$	(1.1	)	$	(2.3	)	$	(3.9	)	$	(4.3	)	$	(4.2	)
Variable-to-fixed interest rate swap	Interest Expense	—			—			—			—			(0.2		)

See Note 13 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (AOCI) for amounts recognized in other comprehensive income (loss) during the three and six months ended June 30, 2017 and 2016.

The following table summarizes the amount and location of gains (losses) recognized in the Condensed Consolidated Statements of Income for those derivative instruments not designated as hedging instruments under ASC 815:



		Gain (Loss) Recognized During
	Location of Gain (Loss)	Three Months Ended					Six Months Ended
	Recognized in	June 30,					June 30,
	Net Income	2017		2016			2017		2016
		(in millions)

Currency forward contracts	Cost of Goods Sold	$	2.2	$	(2.2	)	$	5.7	$	(2.7	)
Currency forward contracts	Other Income, Net	—		—			—		(0.7		)
Currency option contracts	Cost of Goods Sold	1.1		—			1.1		—