XML 32 R22.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Derivatives and Hedging Activities | 9 Months Ended
--- | ---
Sep. 30, 2018
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 accumulated other comprehensive income (loss) ("AOCI") 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 cash flow hedging activities that were included in AOCI were a loss of less than $1.0 million and a $2.5 million gain for the three and nine months ended September 30, 2018, respectively, and a $1.6 million loss and a $6.1 million loss for the three and nine months ended September 30, 2017, respectively. The unrealized amounts in AOCI will fluctuate based on changes in the fair value of open contracts during each reporting period. We estimate that $1.0 million of net unrealized gains related to cash flow hedging activities included in 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, 2018 and December 31, 2017, we had no outstanding interest rate swaps. Net Investment Hedge 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 $15.7 million ($8.1 million net of tax) as of September 30, 2018, and is reflected in AOCI on our Condensed Consolidated Balance Sheets. 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 settled these swaps 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, 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 13, “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 |  | Non-Designated |  | Total
(In millions) | September 30, 2018 |  | December 31, 2017 |  | September 30, 2018 |  | December 31, 2017 |  | September 30, 2018 |  | December 31, 2017
Derivative Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts | $ | 1.0 |  |  | $ | 0.5 |  |  | $ | 1.1 |  |  | $ | 3.6 |  |  | $ | 2.1 |  |  | $ | 4.1 |
Total Derivative Assets | $ | 1.0 |  |  | $ | 0.5 |  |  | $ | 1.1 |  |  | $ | 3.6 |  |  | $ | 2.1 |  |  | $ | 4.1 |
Derivative Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts | $ | (0.1 | ) |  | $ | (2.4 | ) |  | $ | (3.8 | ) |  | $ | (3.3 | ) |  | $ | (3.9 | ) |  | $ | (5.7 | )
Total Derivative Liabilities(1) | $ | (0.1 | ) |  | $ | (2.4 | ) |  | $ | (3.8 | ) |  | $ | (3.3 | ) |  | $ | (3.9 | ) |  | $ | (5.7 | )
Net Derivatives(2) | $ | 0.9 |  |  | $ | (1.9 | ) |  | $ | (2.7 | ) |  | $ | 0.3 |  |  | $ | (1.8 | ) |  | $ | (1.6 | )
(1) | Excludes €400.0 million of euro-denominated debt ($462.6 million equivalent at September 30, 2018 and $474.3 million equivalent at December 31, 2017), designated as a net investment hedge.
(2) | The following table reconciles gross positions without the impact of master netting agreements to the balance sheet classification:
| Other Current Assets |  | Other Current Liabilities
(In millions) | September 30, 2018 |  | December 31, 2017 |  | September 30, 2018 |  | December 31, 2017
Gross position | $ | 2.1 |  |  | $ | 4.1 |  |  | $ | (3.9 | ) |  | $ | (5.7 | )
Impact of master netting agreements | (0.1 | ) |  | (0.4 | ) |  | 0.1 |  |  | 0.4 |
Net amounts recognized on the Condensed Consolidated Balance Sheets | $ | 2.0 |  |  | $ | 3.7 |  |  | $ | (3.8 | ) |  | $ | (5.3 | )
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
| Location of Gain (Loss) Recognized on |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) | Condensed Consolidated Statements of Operations |  | 2018 |  | 2017 |  | 2018 |  | 2017
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |
Cash Flow Hedges: |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts | Cost of sales |  | $ | 1.1 |  |  | $ | (0.1 | ) |  | $ | (0.7 | ) |  | $ | 0.7 |
Treasury locks | Interest expense, net |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
Sub-total cash flow hedges |  |  | 1.1 |  |  | (0.1 | ) |  | (0.6 | ) |  | 0.8 |
Fair Value Hedges: |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps | Interest expense, net |  | 0.1 |  |  | 0.2 |  |  | 0.4 |  |  | 0.4 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts | Other (expense) income, net |  | (0.8 | ) |  | (16.3 | ) |  | (8.3 | ) |  | (12.9 | )
Total |  |  | $ | 0.4 |  |  | $ | (16.2 | ) |  | $ | (8.5 | ) |  | $ | (11.7 | )

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 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration