XML 28 R19.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Derivatives and Hedging Activities | 9 Months Ended
--- | ---
Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Activities | Derivatives and Hedging Activities We report all derivative instruments on our Condensed Consolidated Balance Sheets at fair value and establish criteria for designation and effectiveness of transactions entered into for hedging purposes. As a large global organization, we face exposure to market risks, such as fluctuations in foreign currency exchange rates and interest rates. To manage the volatility relating to these exposures, we enter into various derivative instruments from time to time under our risk management policies. We designate derivative instruments as hedges on a transaction basis to support hedge accounting. The changes in fair value of these hedging instruments offset in part or in whole corresponding changes in the fair value or cash flows of the underlying exposures being hedged. We assess the initial and ongoing effectiveness of our hedging relationships in accordance with our policy. We do not purchase, hold or sell derivative financial instruments for trading purposes. Our practice is to terminate derivative transactions if the underlying asset or liability matures or is sold or terminated, or if we determine the underlying forecasted transaction is no longer probable of occurring. We record the fair value positions of all derivative financial instruments on a net basis by counterparty for which a master netting arrangement is utilized. Foreign Currency Forward Contracts Designated as Cash Flow Hedges The primary purpose of our cash flow hedging activities is to manage the potential changes in value associated with the amounts receivable or payable on equipment and raw material purchases that are denominated in foreign currencies in order to minimize the impact of the changes in foreign currencies. We record gains and losses on foreign currency forward contracts qualifying as cash flow hedges in other comprehensive income to the extent that these hedges are effective and until we recognize the underlying transactions in net earnings, at which time we recognize these gains and losses in cost of sales, on our Condensed Consolidated Statements of Operations. Cash flows from derivative financial instruments are classified as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. These contracts generally have original maturities of less than 12 months. Net unrealized after-tax gains/losses related to these contracts that were included in other comprehensive income were $0.9 million loss and $5.7 million loss for the three and nine months ended September 30, 2017, respectively, and $1.3 million gain and $0.8 million loss for the three and nine months ended September 30, 2016. The unrealized amounts in other comprehensive income will fluctuate based on changes in the fair value of open contracts during each reporting period. We estimate that $0.4 million of net unrealized derivative losses included in accumulated other comprehensive income (AOCI) will be reclassified into earnings within the next twelve months. Foreign Currency Forward Contracts Not Designated as Hedges Our subsidiaries have foreign currency exchange exposure from buying and selling in currencies other than their functional currencies. The primary purposes of our foreign currency hedging activities are to manage the potential changes in value associated with the amounts receivable or payable on transactions denominated in foreign currencies and to minimize the impact of the changes in foreign currencies related to foreign currency-denominated interest-bearing intercompany loans and receivables and payables. The changes in fair value of these derivative contracts are recognized in other income, net, on our Condensed Consolidated Statements of Operations and are largely offset by the remeasurement of the underlying foreign currency-denominated items indicated above. Cash flows from derivative financial instruments are classified as cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows. These contracts generally have original maturities of less than 12 months. Interest Rate Swaps From time to time, we may use interest rate swaps to manage our fixed and floating interest rates on our outstanding indebtedness. At September 30, 2017 and December 31, 2016, we had no outstanding interest rate swaps. Interest Rate and Currency Swaps In 2014, in connection with exercising the $100.0 million delayed draw under the senior secured credit facility, we entered into a series of interest rate and currency swaps in a notional amount of $100.0 million. On September 30, 2016, the first $20.0 million swap contract matured and was settled. As a result of the settlement, the Company received $4.9 million. For the nine months ended September 30, 2017, settlement payments were made for $2.5 million. In July 2017, we prepaid the Brazilian tranche of our Term Loan A facility due in July 2019 in the amount of $96.3 million in connection with the anticipated Diversey transaction. In anticipation of this loan prepayment, we terminated all the swaps used to convert the related U.S. dollar-denominated variable rate obligation into a fixed Brazilian real-denominated obligation. The related activity has been classified as net earnings from discontinued operations, net of tax on the Condensed Consolidated Statement of Operations. Net Investment Hedge During the second quarter of 2015, we entered into a series of foreign currency exchange forwards totaling €270.0 million. These foreign currency exchange forwards hedged a portion of the net investment in a certain European subsidiary against fluctuations in foreign exchange rates and expired in June 2015. The loss of $3.5 million ($2.2 million after tax) is recorded in AOCI on our Condensed Consolidated Balance Sheet. The €400.0 million 4.50% notes issued in June 2015 are designated as a net investment hedge, hedging a portion of our net investment in a certain European subsidiary against fluctuations in foreign exchange rates. The change in the fair value of the debt was $21.5 million ($13.3 million net of taxes) as of September 30, 2017 and is reflected in long-term debt on our Condensed Consolidated Balance Sheet. In March 2015, we entered into a series of cross-currency swaps with a combined notional amount of $425.0 million, hedging a portion of the net investment in a certain European subsidiary against fluctuations in foreign exchange rates. As a result of the sale of Diversey, we terminated these cross-currency swaps in September 2017 and will pay the settlement in October 2017. The fair value of the swaps on the date of termination was a liability of $61.9 million which was partially offset by semi-annual interest settlements of $17.7 million. This resulted in a net impact of $(44.2) million which is recorded in AOCI. For derivative instruments that are designated and qualify as hedges of net investments in foreign operations, settlements and changes in fair values of the derivative instruments are recognized in unrealized net gains or loss on derivative instruments for net investment hedge, a component of AOCI, net of taxes, to offset the changes in the values of the net investments being hedged. Any portion of the net investment hedge that is determined to be ineffective is recorded in other (expense) income, net on the Condensed Consolidated Statements of Operations. Other Derivative Instruments We may use other derivative instruments from time to time to manage exposure to foreign exchange rates and to access to international financing transactions. These instruments can potentially limit foreign exchange exposure by swapping borrowings denominated in one currency for borrowings denominated in another currency. Fair Value of Derivative Instruments See Note 12, “Fair Value Measurements and Other Financial Instruments,” for a discussion of the inputs and valuation techniques used to determine the fair value of our outstanding derivative instruments. The following table details the fair value of our derivative instruments included on our Condensed Consolidated Balance Sheets.
| Cash Flow |  | Net Investment Hedge |  | Non-Designated |  | Total
(In millions) | September 30, 2017 |  | December 31, 2016 |  | September 30, 2017 |  | December 31, 2016 |  | September 30, 2017 |  | December 31, 2016 |  | September 30, 2017 |  | December 31, 2016
Derivative Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts(2) | $ | 0.2 |  |  | $ | 4.9 |  |  | $ | — |  |  | $ | — |  |  | $ | 3.4 |  |  | $ | 11.4 |  |  | $ | 3.6 |  |  | $ | 16.3 |
Interest rate currency swaps(2) | — |  |  | 23.9 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 23.9 |
Total Derivative Assets | $ | 0.2 |  |  | $ | 28.8 |  |  | $ | — |  |  | $ | — |  |  | $ | 3.4 |  |  | $ | 11.4 |  |  | $ | 3.6 |  |  | $ | 40.2 |
Derivative Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts(2) | $ | (3.0 | ) |  | $ | (0.1 | ) |  | $ | — |  |  | $ | — |  |  | $ | (11.3 | ) |  | $ | (11.5 | ) |  | $ | (14.3 | ) |  | $ | (11.6 | )
Cross-currency swaps | — |  |  | — |  |  | — |  |  | (5.3 | ) |  | — |  |  | — |  |  | — |  |  | (5.3 | )
Total Derivative Liabilities(1) | $ | (3.0 | ) |  | $ | (0.1 | ) |  | $ | — |  |  | $ | (5.3 | ) |  | $ | (11.3 | ) |  | $ | (11.5 | ) |  | $ | (14.3 | ) |  | $ | (16.9 | )
Net Derivatives(3) | $ | (2.8 | ) |  | $ | 28.7 |  |  | $ | — |  |  | $ | (5.3 | ) |  | $ | (7.9 | ) |  | $ | (0.1 | ) |  | $ | (10.7 | ) |  | $ | 23.3 |
(1) | Excludes €400.0 million of euro-denominated debt ($467.9 million equivalent at September 30, 2017 and $416.7 million equivalent at December 31, 2016), designated as a net investment hedge.
(2) | Amounts related to Diversey have been classified as held for sale on the Condensed Consolidated Balance Sheet as of December 31, 2016, $(1.4) million related to foreign currency forward contracts were reclassified to liabilities held for sale and $23.9 million related to interest rate and currency swaps were reclassified to assets held for sale. These financial instruments have been classified as Level 2 Inputs. Refer to Note 12 “Fair Value Measurements and Other Financial Instruments” for discussion of the inputs and valuation techniques used.
(3) | The following table reconciles gross positions without the impact of master netting agreements to the balance sheet classification:
| Other Current Assets |  | Other Current Liabilities |  | Other Non-current Assets |  | Other Non-current Liabilities
(In millions) | September 30, 2017 |  | December 31, 2016 |  | September 30, 2017 |  | December 31, 2016 |  | September 30, 2017 |  | December 31, 2016 |  | September 30, 2017 |  | December 31, 2016
Gross position | $ | 3.5 |  |  | $ | 22.6 |  |  | $ | (14.2 | ) |  | $ | (11.6 | ) |  | $ | — |  |  | $ | 17.6 |  |  | $ | — |  |  | $ | (5.3 | )
Reclassified to held for sale(1) | — |  |  | (7.3 | ) |  | — |  |  | 2.3 |  |  | — |  |  | (17.6 | ) |  | — |  |  | — |
Impact of master netting agreements | (0.1 | ) |  | (0.2 | ) |  | 0.1 |  |  | 0.2 |  |  | — |  |  | — |  |  | — |  |  | — |
Net amounts recognized on the Condensed Consolidated Balance Sheet | $ | 3.4 |  |  | $ | 15.1 |  |  | $ | (14.1 | ) |  | $ | (9.1 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (5.3 | )
(1) | Amounts related to Diversey have been classified as held for sale on the Condensed Consolidated Balance Sheet as of December 31, 2016.
The following table details the effect of our derivative instruments on our Condensed Consolidated Statements of Operations.
|  | Amount of Gain (Loss) Recognized in Earnings on Derivatives
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) |  | 2017 |  | 2016 |  | 2017 |  | 2016
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |
Cash Flow Hedges: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts(1)(4) |  | $ | (0.1 | ) |  | $ | (1.1 | ) |  | $ | 1.8 |  |  | $ | (0.9 | )
Interest rate and currency swaps(2)(4) |  | (2.3 | ) |  | (0.4 | ) |  | (3.4 | ) |  | (24.6 | )
Treasury locks(3) |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
Sub-total cash flow hedges |  | (2.4 | ) |  | (1.5 | ) |  | (1.5 | ) |  | (25.4 | )
Fair Value Hedges: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | 0.2 |  |  | 0.2 |  |  | 0.4 |  |  | 0.4 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts(4) |  | (13.9 | ) |  | (6.0 | ) |  | (8.3 | ) |  | (24.7 | )
Total |  | $ | (16.1 | ) |  | $ | (7.3 | ) |  | $ | (9.4 | ) |  | $ | (49.7 | )
(1) | Amounts recognized on the foreign currency forward contracts were included in cost of sales during the three and nine months ended September 30, 2017 and 2016.
(2) | Amounts recognized on the interest rate and currency swaps for the three months ended September 30, 2017 and 2016, included a $2.0 million loss and a $1.2 million gain, respectively, which is included in other (expense) income, net and interest (expense) income of $(0.4) million and $(1.5) million, respectively, related to the hedge of the interest payments. Amounts recognized on the interest rate and currency swaps for the nine months ended September 30, 2017 and 2016, included a $1.0 million loss and a $20.5 million loss, respectively, which is included in other (expense) income, net and interest (expense) income of $(2.5) million and $(4.0) million, respectively, related to the hedge of the interest payments.
(3) | Amounts recognized on the treasury locks were included in interest expense which is related to amortization of terminated interest rate swaps.
(4) | Amounts related to Diversey have been reclassified to earnings from discontinued operations before income tax provision on the Condensed Consolidated Statement of Operations. For the three months ended September 30, 2017 and 2016 there was $0.1 million and $3.5 million reclassified, respectively. For the nine months ended September 30, 2017 and September 30, 2016 there was $3.7 million and $(17.8) million reclassified, respectively.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624171-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41620-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624163-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579240-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624177-113959 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41641-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579245-113959 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624258-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708775-113959 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708773-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5618551-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5580258-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624181-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41638-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration