XML 34 R19.htm IDEA: XBRL DOCUMENT
v3.3.1.900

Derivatives | 12 Months Ended
--- | ---
Dec. 31, 2015
Derivative Instruments and Hedges, Assets [Abstract] |
Derivatives | 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 does not use derivative instruments for speculative or trading purposes. Fair Value Hedges-Interest Rate Swap Agreements The Company enters into interest rate swap agreements related to existing debt obligations with initial maturities ranging from five to ten years. The Company’s interest rate swap agreements have the economic effect of modifying the fixed interest obligations associated with approximately $596.0 million of the medium-term notes so that the interest payable on these medium-term notes effectively became variable. The Company uses these interest rate swap agreements to manage its interest rate exposure and to achieve a desired proportion of variable- and fixed-rate debt. The critical terms of the interest rate swap agreements match the critical terms of the medium-term notes that the interest rate swap agreements pertain to, including the notional amounts and maturity dates. These transactions are characterized as fair value hedges for financial accounting purposes because they protect the Company against changes in the fair values of certain fixed-rate borrowings due to benchmark interest rate movements. The changes in fair values of these interest rate swap agreements are recognized as interest expense in the Consolidated Statements of Operations with the corresponding amounts included in other assets or other noncurrent liabilities in the Consolidated Balance Sheets. The amount of net gain (loss) attributable to the risk being hedged is recognized as interest expense in the Consolidated Statements of Operations with the corresponding amount included in Current Portion of Long-term Debt and Long-term Debt. The periodic interest settlements for the interest rate swap agreements are included as interest expense and are included as a part of cash flows from operating activities. Cash Flow Hedges-Forward-Starting Interest Rate Swaps The Company also uses derivatives to hedge interest rates on anticipated issuances of medium-term notes occurring within one year or less of the inception date of the derivative, and the Company uses these instruments to reduce the volatility in future interest payments that would be made pursuant to the anticipated issuances of medium-term notes. These derivatives are designated as cash flow hedges. The changes in fair values of these instruments are recognized in other comprehensive income (loss), and after the medium-term notes are issued and the derivative instruments are settled, the amount in other comprehensive income (loss) is amortized to interest expense in the Consolidated Statements of Operations over the term of the related medium-term notes. The cash paid or received from the settlement of forward-starting interest rate swaps is included in cash flows from operating activities. Cash Flow Hedges-Cross-Currency Swap Agreements The Company’s foreign exchange risk management policy emphasizes hedging foreign currency intercompany financing activities with derivatives with maturity dates of three years or less. The Company uses derivative instruments, such as cross-currency swap agreements, to hedge currency risk associated with foreign currency-denominated assets and liabilities associated with intercompany financing activities. In connection with intercompany financing arrangements entered into in April 2015, the Company entered into two cross-currency swap agreements to manage the related foreign currency exchange risk of the intercompany financing arrangements. As of December 31, 2015, the notional value of outstanding cross-currency interest rate swaps was $189.1 million, and the cross-currency swaps are intended to eliminate uncertainty in cash flows in U.S. Dollars and British Pounds in connection with the intercompany financing arrangements. The cross-currency swap agreements have been designated as qualifying hedging instruments and are accounted for as cash flow hedges. The critical terms of the cross-currency swap agreements correspond to the terms of the intercompany financing arrangements, including the annual principal and interest payments being hedged, and the cross-currency swap agreements mature at the same time as the intercompany financing arrangements. The Company uses the hypothetical derivative method to measure the effectiveness of its cross-currency swap agreements. The fair values of these cross-currency swap agreements are recognized as other assets or other noncurrent liabilities in the Consolidated Balance Sheets. The effective portions of the changes in fair values of these cross-currency swap agreements are reported in accumulated other comprehensive income (loss) in the Consolidated Balance Sheets and an amount is reclassified out of accumulated other comprehensive income (loss) into other expense, net, in the same period that the carrying value of the underlying foreign currency intercompany financing arrangements are remeasured. The ineffective portion of the unrealized gains and losses on these cross-currency swaps, if any, is recorded immediately to other expense, net. The Company evaluates the effectiveness of its cross-currency swap agreements on a quarterly basis, and the Company did not record any ineffectiveness for the year ended December 31, 2015. The cash flows related to the cross-currency swap agreements, including amounts related to the periodic interest settlements and the principal balances, will be included in cash flows from operating activities. Cash Flow Hedges-Foreign Currency Forward Contracts The Company’s foreign exchange risk management policy generally emphasizes hedging certain transaction exposures of 18- month durations or less. The Company transacts business in various foreign currencies and periodically enters into primarily foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures, and the Company has designated such instruments as hedges of probable forecasted foreign currency denominated sales or purchases. As of December 31, 2015, the notional amounts of the forward contracts held to purchase U.S. Dollars in exchange for other major international currencies was $185.2 million, and the notional amounts of additional forward contracts held to buy and sell international currencies were $82.6 million. The net gains (losses) related to these forward contracts are included in accumulated other comprehensive income (loss) until the hedged transaction occurs or when the hedged transaction is no longer probable of occurring. The net gains (losses) in accumulated other comprehensive income (loss) are generally reclassified to cost of products sold in the Consolidated Statements of Operations because the forward currency contracts generally hedge purchases of inventory. The cash flows related to these foreign currency contracts are included in cash flows from operating activities. Hedging instruments are not available for certain currencies in countries in which the Company has operations. In these cases, the Company uses alternative means in an effort to achieve an economic offset to the local currency exposure such as invoicing and/or paying intercompany and third party transactions in U.S. Dollars. The Company reports its derivative positions in the 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 years ended December 31, 2015, 2014 and 2013. The following table summarizes the Company’s outstanding derivative instruments and their effects on the Consolidated Balance Sheets as of December 31, 2015 and 2014 (in millions):
|  |  |  | Assets |  |  |  | Liabilities
Derivatives designated as hedging instruments |  | Balance Sheet Location |  | 2015 |  | 2014 |  | Balance Sheet Location |  | 2015 |  | 2014
Interest rate swaps |  | Other assets |  | $ | 2.2 |  |  | $ | — |  |  | Other noncurrent liabilities |  | $ | 5.3 |  |  | $ | 11.8 |
Forward-starting interest rate swaps |  | Prepaid expenses and other |  | 0.1 |  | — |  | — |  |  | Other accrued liabilities |  | 3.2 |  |  | — |
Cross-currency swaps |  | Other assets |  | 0.6 |  |  | — |  |  | Other noncurrent liabilities |  | 3.3 |  |  | — |
Foreign exchange contracts on inventory-related purchases |  | Prepaid expenses and other |  | 6.6 |  |  | 7.7 |  |  | Other accrued liabilities |  | 0.1 |  |  | 0.4 |
Foreign exchange contracts on intercompany borrowings |  | Prepaid expenses and other |  | — |  |  | — |  |  | Other accrued liabilities |  | 1.6 |  |  | — |
Total assets |  |  |  | $ | 9.5 |  |  | $ | 7.7 |  |  | Total liabilities |  | $ | 13.5 |  |  | $ | 12.2 |
The fair values of outstanding derivatives that are not designated as hedges for accounting purposes were not material as of December 31, 2015 and 2014. The Company is not a party to any derivatives that require collateral to be posted prior to settlement. During 2014, the Company settled interest rate swaps designated as fair value hedges of $154.0 million principal amount of the 2020 Notes that were repaid in 2014. In connection with the repayment of the 2020 Notes, the Company paid cash of $5.9 million to counterparties as settlement for the interest rate swaps. During 2014, the Company, at its option, terminated and settled an interest rate swap related to a $250.0 million principal amount of 6.25% medium-term notes with an original maturity of April 2018. The Company received cash proceeds of $18.7 million from the counterparty as settlement for the interest rate swap. In December 2014, the Company entered into a fixed-for-floating interest rate contract with a third-party financial institution for $250.0 million principal amount of the 2024 Notes. During the term of the contract, the Company will receive semiannual interest payments from the counterparties based on a fixed annual interest rate of 4.0%; and, concurrently, the Company will make semiannual interest payments at a rate indexed to the LIBOR. The Company has a total of $596.0 million principal amount of medium-term notes hedged with fixed-for-floating contracts with third-party financial institutions as of December 31, 2015. Gains and losses resulting from the settlement of interest rate swaps designated and effective as hedges are deferred and amortized as adjustments to interest expense over the remaining term of the debt covered by the interest rate swaps. The cash paid and received from the settlement of interest rate swaps is included in cash provided by operating activities in accrued liabilities and other in the Consolidated Statements of Cash Flows. Fair Value Hedges The pretax effects of derivative instruments designated as fair value hedges on the Company’s Consolidated Statements of Operations for 2015, 2014 and 2013 were as follows (in millions):
Derivatives in fair value relationships | Location of gain (loss) recognized in income |  | Amount of gain (loss) recognized in income
| 2015 |  | 2014 |  | 2013
Interest rate swaps | Interest expense, net |  | $ | 8.7 |  |  | $ | 13.4 |  |  | $ | (44.1 | )
Fixed-rate debt | Interest expense, net |  | $ | (8.7 | ) |  | $ | (13.4 | ) |  | $ | 44.1 |
The Company did not realize any ineffectiveness related to fair value hedges during 2015, 2014, and 2013. Cash Flow Hedges The pretax effects of derivative instruments designated as cash flow hedges on the Company’s Consolidated Statements of Operations and AOCI for 2015, 2014 and 2013 were as follows (in millions):
Derivatives in cash flow hedging relationships |  | Location of gain (loss) recognized in income |  | Amount of gain (loss) reclassified from AOCI into income
| 2015 |  | 2014 |  | 2013
Foreign exchange contracts on inventory-related purchases |  | Cost of products sold |  | $ | 16.2 |  |  | $ | 5.9 |  |  | $ | 3.8 |
Foreign exchange contracts on intercompany borrowings |  | Other expense, net |  | (0.1 | ) |  | 0.3 |  |  | — |
Forward-starting interest rate swaps |  | Interest expense, net |  | (0.8 | ) |  | (0.7 | ) |  | (0.7 | )
Cross-currency swaps |  | Other expense, net |  | (1.0 | ) |  | — |  |  | — |
|  |  |  | $ | 14.3 |  |  | $ | 5.5 |  |  | $ | 3.1 |
Derivatives in cash flow hedging relationships |  | Amount of gain (loss) recognized in AOCI
| 2015 |  | 2014 |  | 2013
Foreign exchange contracts on inventory-related purchases |  | $ | 15.5 |  |  | $ | 11.6 |  |  | $ | 5.2 |
Foreign exchange contracts on intercompany borrowings |  | 0.3 |  |  | 3.3 |  |  | (0.6 | )
Forward-starting interest rate swaps |  | (3.1 | ) |  | — |  |  | — |
Cross-currency swaps |  | (2.7 | ) |  | — |  |  | — |
|  | $ | 10.0 |  |  | $ | 14.9 |  |  | $ | 4.6 |
During December 2015, the Company entered into forward-starting interest rate swaps for an aggregate $1.0 billion notional amount for the expected issuance of medium-term notes to finance the Jarden transaction (the “2015 Swaps”). During January 2016, the Company entered into additional forward-starting interest rate swaps for an aggregate $1.3 billion notional amount (collectively with the 2015 Swaps, the “Swaps”). The total notional amount of the Swaps relating to anticipated issuances of medium-term notes for the Jarden transaction is $2.3 billion. The pretax loss for the 2015 Swaps was $3.1 million as of December 31, 2015, which was recorded in AOCI. The Company’s net position with respect to the Swaps fluctuates based on changes in benchmark interest rates. Declines in the benchmark interest rates after the date Company enters into the Swaps generally results in amounts the Company is required to pay the counterparties to settle such Swaps. If benchmark interest rates do not increase from their current levels, the Company would be required to pay the counterparties for the value of the Swaps since benchmark interest rates have declined since the Company entered into the Swaps. During 2014, the Company entered into forward-starting interest rate swaps with certain counterparties for an aggregate $400.0 million notional amount (the “2014 Forward Swaps”) to swap floating LIBOR rates with a weighted-average fixed rate. The 2014 Forward Swaps had original maturities in November 2014. The 2014 Forward Swaps were intended to fix the “risk-free” component of the interest rate of the Company’s forecasted debt issuances that were probable of occurring at the time the 2014 Forward Swaps were entered into. In November 2014, the 2014 Forward Swaps were settled upon the issuance of the 2019 Notes and 2024 Notes. The Company received (paid) $1.9 million, $3.1 million and $(1.6) million to settle foreign exchange contracts on intercompany borrowings during 2015, 2014 and 2013, respectively. Such amounts are included in changes in accrued liabilities and other in the Consolidated Statements of Cash Flows for 2015, 2014 and 2013. The ineffectiveness related to cash flow hedges during 2015, 2014 and 2013 was not material. The Company estimates that during the next 12 months it will reclassify income of $7.4 million included in the pretax amount recorded in AOCI as of December 31, 2015 into earnings.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgesAbstract
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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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=35706170&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