XML 30 R18.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Derivatives | 3 Months Ended
--- | ---
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Footnote 12 — Derivatives From time to time, the Company enters into derivative transactions to hedge its exposures to interest rate, foreign currency rate and commodity price fluctuations. The Company does not enter into derivative transactions for trading purposes. Interest Rate Contracts The Company manages its fixed and floating rate debt mix using interest rate swaps. The Company may use fixed and floating rate swaps to alter its exposure to the impact of changing interest rates on its consolidated results of operations and future cash outflows for interest. Floating rate swaps would be used, depending on market conditions, to convert the fixed rates of long-term debt into short-term variable rates. Fixed rate swaps would be used to reduce the Company’s risk of the possibility of increased interest costs. Interest rate swap contracts are therefore used by the Company to separate interest rate risk management from the debt funding decision. The cash paid and received from the settlement of interest rate swaps is included in interest expense. Fair Value Hedges At March 31, 2018, the Company had approximately $527 million notional amount of interest rate swaps that exchange a fixed rate of interest for a variable rate (LIBOR) of interest plus a weighted average spread. These floating rate swaps are designated as fair value hedges against $277 million of principal on the 4.7% senior notes due 2020 and $250 million of principal on the 4.0% senior notes due 2024 for the remaining life of these notes. The effective portion of the fair value gains or losses on these swaps is offset by fair value adjustments in the underlying debt. Cross-Currency Contracts The Company uses cross-currency swaps to hedge foreign currency risk on certain intercompany financing arrangements with foreign subsidiaries. As of March 31, 2018, the notional value of outstanding cross-currency interest rate swaps was approximately $166 million. The cross-currency interest rate swaps are intended to eliminate uncertainty in cash flows in U.S. Dollars and British Pounds in connection with the intercompany financing arrangements. The effective portions of the changes in fair values of these cross-currency interest rate swaps are reported in AOCI and an amount is reclassified out of AOCI into other (income) expense, net, which is offset in the same period by the remeasurement in the carrying value of the underlying foreign currency intercompany financing arrangements being hedged. Foreign Currency Contracts The Company uses forward foreign currency contracts to mitigate the foreign currency exchange rate exposure on the cash flows related to forecasted inventory purchases and sales and have maturity dates through November 2018. The derivatives used to hedge these forecasted transactions that meet the criteria for hedge accounting are accounted for as cash flow hedges. The effective portion of the gains or losses on these derivatives is deferred as a component of AOCI and is recognized in earnings at the same time that the hedged item affects earnings and is included in the same caption in the statements of operations as the underlying hedged item. At March 31, 2018, the Company had approximately $396 million notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales. The Company also uses foreign currency contracts, primarily forward foreign currency contracts, to mitigate the foreign currency exposure of certain other foreign currency transactions. At March 31, 2018, the Company had approximately $1.5 billion notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through February 2019. Fair market value gains or losses are included in the results of operations and are classified in other (income) expense, net. The following table presents the fair value of derivative financial instruments as of the dates indicated (in millions):
|  | March 31, 2018 |  |  | December 31, 2017 |
|  | Fair Value of Derivatives |  |  | Fair Value of Derivatives |
|  | Asset (a) |  |  | Liability (a) |  |  | Asset (a) |  |  | Liability (a) |
Derivatives designated as effective hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps |  | $ | — |  |  | $ | 24.9 |  |  | $ | — |  |  | $ | 21.5 |
Foreign currency contracts |  |  | 2.6 |  |  |  | 6.9 |  |  |  | 2.0 |  |  |  | 6.6 |
Fair value hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | — |  |  |  | 16.3 |  |  |  | — |  |  |  | 7.8 |
Derivatives not designated as effective hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts |  |  | 9.4 |  |  |  | 9.7 |  |  |  | 12.7 |  |  |  | 20.8 |
Commodity contracts |  |  | 0.1 |  |  |  | — |  |  |  | 0.2 |  |  |  | — |
Total |  | $ | 12.1 |  |  | $ | 57.8 |  |  | $ | 14.9 |  |  | $ | 56.7 |
(a) Consolidated balance sheet location: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset: Prepaid expenses and other, and other non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liability: Other accrued liabilities, and current and non-current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
The following tables presents gain and loss activity (on a pretax basis) for the periods indicated related to derivative financial instruments designated or previously designated, as effective hedges (in millions):
|  |  |  | Three Months Ended March 31, 2018 |  |  | Three Months Ended March 31, 2017 |
|  |  |  | Gain/(Loss) |  |  | Gain/(Loss) |
|  | Location of gain/(loss) recognized in income |  | Recognized in OCI (a) (effective portion) |  |  | Reclassified from AOCI to Income |  |  | Recognized in OCI (a) (effective portion) |  |  | Reclassified from AOCI to Income |
Interest rate swaps |  | Interest expense, net |  | $ | — |  |  | $ | (1.9 | ) |  | $ | — |  |  | $ | (2.0 | )
Foreign currency contracts |  | Sales and cost of sales |  |  | (5.3 | ) |  |  | (6.4 | ) |  |  | (11.8 | ) |  |  | 8.6 |
Cross-currency swaps |  | Other income (expense), net |  |  | (3.4 | ) |  |  | (4.8 | ) |  |  | (3.6 | ) |  |  | (6.9 | )
Total |  |  |  | $ | (8.7 | ) |  | $ | (13.1 | ) |  | $ | (15.4 | ) |  | $ | (0.3 | )
(a) | Represents effective portion recognized in Other Comprehensive Income (Loss) (“OCI”).
The amount of ineffectiveness related to cash flow hedges during the three months ended March 31, 2018 and 2017 was not material. At March 31, 2018, deferred net losses of approximately $16 million within AOCI are expected to be reclassified to earnings over the next twelve months. During the three months ended March 31, 2018 and 2017, the Company recognized expense of $9.5 million and $21.6 million, respectively, in other (income) expense, net, related to derivatives that are not designated as hedging instruments, which was mostly offset by foreign currency movement in the underlying exposure.

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