Derivatives

The use of financial instruments, including derivatives, exposes the Company to market risk related to changes in interest rates, foreign currency exchange rates and commodity prices. The Company primarily uses derivatives to manage its interest rate exposure, to achieve a desired proportion of variable and fixed-rate debt, to manage the risk associated with the volatility of future cash flows denominated in foreign currencies and to manage changes in fair value resulting from changes in foreign currency exchange rates. The Company’s foreign exchange risk management policy generally emphasizes hedging transaction exposures of one-year duration or less and hedging foreign currency intercompany financing activities with derivatives with maturity dates of one year or less. The Company reports its derivative positions in the Condensed Consolidated Balance Sheets on a gross basis and does not net asset and liability derivative positions with the same counterparty. The Company monitors its positions with, and the credit quality of, the financial institutions that are parties to its financial transactions. Gains and losses from changes in fair values of derivatives that are not designated as hedges for accounting purposes are recognized currently in earnings, and such amounts were not material for the three and nine months ended September 30, 2013 and 2012.

The following table summarizes the Company’s outstanding derivative instruments and their effects on the Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012 (in millions):



		Assets					Liabilities
Derivatives designated as hedging instruments	Balance Sheet Location	September 30, 2013		December 31, 2012		Balance Sheet Location	September 30, 2013		December 31, 2012
Interest rate swaps	Other assets	$	26.2	$	38.9	Other noncurrent liabilities	$	29.2	$	7.2
Foreign exchange contracts on inventory-related purchases	Prepaid expenses and other	0.8		0.5		Other accrued liabilities	0.1		0.2
Foreign exchange contracts on intercompany borrowings	Prepaid expenses and other	0.1		—		Other accrued liabilities	0.1		1.1
Total assets		$	27.1	$	39.4	Total liabilities	$	29.4	$	8.5

The fair values of outstanding derivatives that are not designated as hedges for accounting purposes were not material as of September 30, 2013 and December 31, 2012.

The Company is not a party to any derivatives that require collateral to be posted prior to settlement.

Fair Value Hedges

The following table presents the pretax effects of derivative instruments designated as fair value hedges on the Company’s Condensed Consolidated Statements of Operations (in millions):



Derivatives in fair value hedging relationships	Location of gain (loss) recognized in income	Amount of gain (loss) recognized in income
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2013			2012			2013			2012
Interest rate swaps	Interest expense, net	$	2.3		$	2.3		$	(34.7	)	$	5.5
Fixed-rate debt	Interest expense, net	$	(2.3	)	$	(2.3	)	$	34.7		$	(5.5	)

The Company did not realize any ineffectiveness related to fair value hedges during the three and nine months ended September 30, 2013 and 2012.

Cash Flow Hedges

The following table presents the pretax effects of derivative instruments designated as cash flow hedges on the Company’s Condensed Consolidated Statements of Operations and accumulated other comprehensive income (loss) (“AOCI”) (in millions):



Derivatives in cash flow hedging relationships	Location of gain (loss) recognized in income	Amount of gain (loss) reclassified from AOCI into income
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2013			2012			2013			2012
Foreign exchange contracts on inventory-related purchases	Cost of products sold	$	0.7		$	(0.3	)	$	2.9		$	0.5
Foreign exchange contracts on intercompany borrowings	Interest expense, net	—			—			—			(0.1		)
Forward interest rate swaps	Interest expense, net	(0.2		)	—			(0.6		)	—
Commodity swap	Cost of products sold	—			(1.4		)	—			(1.9		)
		$	0.5		$	(1.7	)	$	2.3		$	(1.5	)



Derivatives in cash flow hedging relationships	Amount of gain (loss) recognized in AOCI
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Foreign exchange contracts on inventory-related purchases	$	(1.0	)	$	(2.0	)	$	3.3		$	(2.1	)
Foreign exchange contracts on intercompany borrowings	(1.9		)	(2.0		)	(0.1		)	(0.4		)
Forward interest rate swaps	—			(0.8		)	—			0.3
Commodity swap	—			(0.4		)	—			(3.6		)
	$	(2.9	)	$	(5.2	)	$	3.2		$	(5.8	)

The Company did not realize any ineffectiveness related to cash flow hedges during the three and nine months ended September 30, 2013 and 2012. As of September 30, 2013, the Company expects to reclassify net losses of $0.1 million into earnings during the next 12 months.