
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 derivative contracts From time to time, we use foreign currency forward contracts to reduce the effects of fluctuations in exchange rates relating to certain foreign currencies. As of March 31, 2019, we have currency forward contracts outstanding with a total notional amount of $203.1 million that hedge our exposure to changes in foreign currency exchange rates for certain payroll expenses into the first quarter of 2022 and other items into the fourth quarter of 2019.

Variable-to-fixed interest rate swap In 2018, 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: $900.0 million through May 2019, $750.0 million through May 2020, $500.0 million through May 2021, $400.0 million through May 2022 and $400.0 million through May 2023.

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



	Location	Gain (Loss) Reclassified During					Total of Financial			Gain Expected
	of Gain (Loss)	Three Months Ended					Statement			to be Reclassified
	Reclassified into	March 31,					Line Item			During the
	Net Income	2019		2018			2019			Next 12 Months
		(in millions)

Currency forward contracts	Cost of Goods Sold	$	0.2	$	(2.0	)	$	1,497.0		$	1.9
Variable-to-fixed interest rate swap	Interest Expense	1.2		0.4			(53.4		)	0.4

See Note 13 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (AOCI) for amounts recognized in other comprehensive income (loss) during the three months ended March 31, 2019 and 2018.

The following table summarizes the amount and location of gains and 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					Total of Financial
	Location of Gain (Loss)	Three Months Ended					Statement Line
	Recognized in	March 31,					Item
	Net Income	2019			2018		2019
		(in millions)

Currency forward contracts	Cost of Goods Sold	$	1.2		$	4.0	$	1,497.0
Currency forward contracts	Other Income (Expense), net	(0.2		)	—		(3.0		)