XML 46 R19.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Derivatives | 12 Months Ended
--- | ---
Dec. 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 December 31, 2018, the Company had approximately $527 million notional amount of interest rate swaps that exchange a fixed rate of interest for 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. During 2018, all the Company’s cross-currency interest rate swaps matured. The cross-currency interest rate swaps were intended to eliminate uncertainty in cash flows in U.S. Dollars and British Pounds in connection with the intercompany financing arrangements. 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 December 2019. 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 December 31, 2018, the Company had approximately $504 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 December 31, 2018, the Company had approximately $1.0 billion notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through October 2020. Fair market value gains or losses are included in the results of operations and are classified in other (income) expense, net in the Company’s Consolidated Statement of Operations. The following table presents the fair value of derivative financial instruments as of December 31, (in millions):
|  | 2018 |  |  | 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 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 21.5 |
Foreign currency contracts |  |  | 13.3 |  |  |  | 0.7 |  |  |  | 2.0 |  |  |  | 6.6 |
Fair value hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | — |  |  |  | 11.5 |  |  |  | — |  |  |  | 7.8 |
Derivatives not designated as effective hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts |  |  | 12.9 |  |  |  | 4.2 |  |  |  | 12.7 |  |  |  | 20.8 |
Commodity contracts |  |  | — |  |  |  | 0.9 |  |  |  | 0.2 |  |  |  | — |
Total |  | $ | 26.2 |  |  | $ | 17.3 |  |  | $ | 14.9 |  |  | $ | 56.7 |
(a) Consolidated balance sheet location: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset: Prepaid expenses and other, and other non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liability: Other accrued liabilities, and other non-current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
The Company recognized expense (income) of $1.8 million, $41.5 million and ($25.6) million in other (income) expense, net, during the years ended December 31, 2018 and 2017 and 2016, respectively, related to derivatives that are not designated as hedging instruments. The Company is not a party to any derivatives that require collateral to be posted prior to settlement. Cash Flow Hedges The following table presents gain and loss activity (on a pretax basis) for 2018, 2017 and 2016 related to derivative financial instruments designated as effective hedges:
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | Gain/(Loss) |  |  | Gain/(Loss) |  |  | Gain/(Loss) |
(in millions) |  | Recognized in OCI (a) |  |  | Reclassified from AOCI to Income |  |  | Recognized in OCI (a) |  |  | Reclassified from AOCI to Income |  |  | Recognized in OCI (a) |  |  | Reclassified from AOCI to Income |
Interest rate swaps (b) |  | $ | — |  |  | $ | (26.6 | ) |  | $ | — |  |  | $ | (8.2 | ) |  | $ | (88.1 | ) |  | $ | (6.2 | )
Foreign currency contracts (c) |  |  | 24.1 |  |  |  | (13.0 | ) |  |  | (33.1 | ) |  |  | 6.8 |  |  |  | 31.3 |  |  |  | 7.4 |
Cross-currency swaps (d) |  |  | (1.7 | ) |  |  | (3.1 | ) |  |  | (5.8 | ) |  |  | (6.9 | ) |  |  | (13.0 | ) |  |  | (13.2 | )
Total |  | $ | 22.4 |  |  | $ | (42.7 | ) |  | $ | (38.9 | ) |  | $ | (8.3 | ) |  | $ | (69.8 | ) |  | $ | (12.0 | )
(a) | Represents effective portion recognized in Other Comprehensive Income (“OCI”).
(b) | Portion reclassified from AOCI to income recognized in interest expense.
(c) | Portion reclassified from AOCI to income recognized in sales and cost of products sold.
(d) | Portion reclassified from AOCI to income recognized in other income (expense), net
The ineffectiveness related to cash flow hedges during 2018, 2017 and 2016 was not material. At December 31, 2018, deferred net gains of approximately $17.9 million within AOCI are expected to be reclassified to earnings over the next twelve months.

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://fasb.org/us-gaap/role/ref/legacyRef -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