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

Derivative Financial Instruments | 6 Months Ended
--- | ---
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | (11) Derivative Financial Instruments Cash Flow Hedges Interest Rate Swaps. Spectrum Brands uses interest rate swaps to manage its interest rate risk. The swaps are designated as cash flow hedges with the changes in fair value recorded in AOCI and as a derivative hedge asset or liability, as applicable. The swaps settle periodically in arrears with the related amounts for the current settlement period payable to, or receivable from, the counterparties included in accrued liabilities or receivables, respectively, and recognized in earnings as an adjustment to interest from the underlying debt to which the swap is designated. Due to the expected settlement of Spectrum Brands’ Term Loan using proceeds from the GBA divestitures, as discussed in Note 3, Divestitures, a portion of the projected cash flows was no longer deemed probable and therefore de-designated a portion of the hedge as ineffective. At March 31, 2018 and September 30, 2017, Spectrum Brands had a series of U.S. dollar denominated interest rate swaps outstanding which effectively fix the interest on floating rate debt, exclusive of lender spreads, at 1.76% for a notional principal amount of $300.0 through May 2020. The derivative net gain estimated to be reclassified from AOCI into earnings over the next 12 months is $0.6, net of tax. Spectrum Brands’ interest rate swaps financial instruments at March 31, 2018 and September 30, 2017 were as follows:
|  | March 31, 2018 |  | September 30, 2017
|  | Notional Amount |  | Remaining Years |  | Notional Amount |  | Remaining Years
Interest rate swaps - fixed |  | $ | 300.0 |  |  | 2.1 |  | $ | 300.0 |  |  | 2.6
Commodity Swaps. Spectrum Brands is exposed to risk from fluctuating prices for raw materials, specifically brass used in its manufacturing processes. Spectrum Brands hedges a portion of the risk associated with the purchase of these materials through the use of commodity swaps. The hedge contracts are designated as cash flow hedges with the fair value changes recorded in AOCI and as a hedge asset or liability, as applicable. The unrecognized changes in fair value of the hedge contracts are reclassified from AOCI into earnings when the hedged purchase of raw materials also affects earnings. The swaps effectively fix the floating price on a specified quantity of raw materials through a specified date. At March 31, 2018, Spectrum Brands had a series of brass swap contracts outstanding through August 2019. The derivative net gains estimated to be reclassified from AOCI into earnings over the next 12 months is $0.1, net of tax. Spectrum Brands had the following commodity swap contracts outstanding as of March 31, 2018 and September 30, 2017:
|  | March 31, 2018 |  | September 30, 2017
|  | Notional |  | Contract Value |  | Notional |  | Contract Value
Brass swap contracts |  | 1.0 Tons |  | $ | 5.5 |  |  | 1.3 Tons |  | $ | 6.6 |
Foreign exchange contracts. Spectrum Brands periodically enters into forward foreign exchange contracts to hedge a portion of the risk from forecasted foreign currency denominated third party and intercompany sales or payments. These obligations generally require Spectrum Brands to exchange foreign currencies for U.S. Dollars, Euros, Canadian Dollars (“CAD”) or Japanese Yen. These foreign exchange contracts are cash flow hedges of fluctuating foreign exchange rates related to sales of product or raw material purchases. Until the sale or purchase is recognized, the fair value of the related hedge is recorded in AOCI and as a derivative hedge asset or liability, as applicable. At the time the sale or purchase is recognized, the fair value of the related hedge is reclassified as an adjustment to “Net sales” or purchase price variance in “Cost of goods sold”, respectively, in the accompanying Condensed Consolidated Statements of Operations. At March 31, 2018, Spectrum Brands had a series of foreign exchange derivative contracts outstanding through September 2019. The derivative net losses estimated to be reclassified from AOCI into earnings over the next 12 months is $0.1, net of tax. At March 31, 2018 and September 30, 2017, Spectrum Brands had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $63.3 and $67.5, respectively. Net Investment Hedge On September 20, 2016, SBI issued €425.0 aggregate principal amount of 4.00% Notes due October 1, 2026 (“4.00% Notes”). Spectrum Brands’ 4.00% Notes are denominated in Euros and have been designated as a net investment hedge of the translation of Spectrum Brands’ net investments in Euro denominated subsidiaries at the time of issuance. As a result, the translation of the Euro denominated debt is recognized in AOCI with any ineffective portion recognized as foreign currency translation gains or losses in the accompanying Condensed Consolidated Statements of Operations when the aggregate principal exceeds the net investment in its Euro denominated subsidiaries. Net gains or losses from the net investment hedge are reclassified from AOCI into earnings upon a liquidation event or deconsolidation of Euro denominated subsidiaries. As of March 31, 2018, the hedge was fully effective and no ineffective portion was recognized in earnings. Derivative Contracts Not Designated as Hedges for Accounting Purposes Foreign exchange contracts. Spectrum Brands periodically enters into forward and swap foreign exchange contracts to economically hedge a portion of the risk from third party and intercompany payments resulting from existing obligations. These obligations generally require Spectrum Brands to exchange foreign currencies for U.S. Dollars, CAD, Euros, Pounds Sterling, Taiwanese Dollars, Hong Kong Dollars or Australian Dollars. These foreign exchange contracts are fair value hedges of a related liability or asset recorded in the accompanying Condensed Consolidated Balance Sheets. The gain or loss on the derivative hedge contracts is recorded in earnings as an offset to the change in value of the related liability or asset at each period end. At March 31, 2018, Spectrum Brands had a series of forward exchange contracts outstanding through April 2018. At March 31, 2018 and September 30, 2017, Spectrum Brands had $82.3 and $62.9, respectively, of notional value of such foreign exchange derivative contracts outstanding. Fair Value of Derivative Instruments The fair value of Spectrum Brands’ outstanding derivatives recorded in the accompanying Condensed Consolidated Balance Sheets were as follows:
Asset Derivatives |  | Classification |  | March 31, 2018 |  | September 30, 2017
Derivatives designated as hedging instruments: |  |  |  |  |  |
Interest rate swaps |  | Deferred charges and other assets |  | $ | 1.9 |  |  | $ | 0.4 |
Interest rate swaps |  | Other receivables, net |  | 1.4 |  |  | — |
Commodity swaps |  | Other receivables, net |  | 0.3 |  |  | 0.6 |
Foreign exchange contracts |  | Deferred charges and other assets |  | 0.1 |  |  | 0.2 |
Total asset derivatives designated as hedging instruments |  |  |  | 3.7 |  |  | 1.2 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Foreign exchange contracts |  | Other receivables, net |  | — |  |  | 0.3 |
Total asset derivatives |  |  |  | $ | 3.7 |  |  | $ | 1.5 |
Liability Derivatives |  | Classification |  | March 31, 2018 |  | September 30, 2017
Derivatives designated as hedging instruments: |  |  |  |  |  |
Foreign exchange contracts |  | Accounts payable |  | $ | 0.3 |  |  | $ | 2.3 |
Foreign exchange contracts |  | Other long-term liabilities |  | — |  |  | 0.3 |
Commodity swaps |  | Accounts payable |  | 0.1 |  |  | — |
Interest rate swaps |  | Other current liabilities |  | — |  |  | 0.5 |
Interest rate swaps |  | Accrued interest |  | — |  |  | 0.2 |
Total liability derivatives designated as hedging instruments |  |  |  | 0.4 |  |  | 3.3 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Foreign exchange contracts |  | Accounts payable |  | 0.7 |  |  | — |
Total liability derivatives |  |  |  | $ | 1.1 |  |  | $ | 3.3 |
Spectrum Brands is exposed to the risk of default by the counterparties with which Spectrum Brands transacts and generally does not require collateral or other security to support financial instruments subject to credit risk. Spectrum Brands monitors counterparty credit risk on an individual basis by periodically assessing each counterparty’s credit rating exposure. The maximum loss due to credit risk equals the fair value of the gross asset derivatives that are concentrated with certain domestic and foreign financial institution counterparties. Spectrum Brands considers these exposures when measuring its credit reserve on its derivative assets, which was less than $0.1 as of March 31, 2018 and September 30, 2017. Spectrum Brands’ standard contracts do not contain credit risk related contingent features whereby Spectrum Brands would be required to post additional cash collateral as a result of a credit event. However, Spectrum Brands is typically required to post collateral in the normal course of business to offset its liability positions. As of March 31, 2018 and September 30, 2017, there was no cash collateral outstanding. In addition, as of March 31, 2018 and September 30, 2017, Spectrum Brands had no posted standby letters of credit related to such liability positions. The following tables summarize the impact of the effective portion of Spectrum Brands’ derivative instruments in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2018 and 2017, pre-tax:
Three months ended March 31, 2018 |  | Classification |  | Effective Portion |  | Ineffective Portion
|  |  |  | Gain (Loss) in AOCI |  | Gain (Loss) reclassified to Continuing Operations |  | Reclassified to Discontinued Operations |  | Discontinued Operations
Interest rate swaps |  | Interest expense |  | $ | 1.8 |  |  | $ | — |  |  | $ | 0.7 |  |  | $ | 0.6 |
Commodity swaps |  | Cost of goods sold |  | (0.6 | ) |  | 0.3 |  |  | 1.3 |  |  | — |
Net investment hedge |  | Other income (expense), net |  | (15.2 | ) |  | — |  |  | — |  |  | — |
Foreign exchange contracts |  | Cost of goods sold |  | (4.4 | ) |  | (0.5 | ) |  | (4.8 | ) |  | — |
|  |  |  | $ | (18.4 | ) |  | $ | (0.2 | ) |  | $ | (2.8 | ) |  | $ | 0.6 |
Three months ended March 31, 2017 |  | Classification |  | Effective Portion |  | Ineffective Portion
|  |  |  | Gain (Loss) in AOCI |  | Gain (Loss) reclassified to Continuing Operations |  | Reclassified to Discontinued Operations |  | Discontinued Operations
Interest rate swaps |  | Interest expense |  | $ | (0.4 | ) |  | $ | — |  |  | $ | (0.7 | ) |  | $ | — |
Commodity swaps |  | Cost of goods sold |  | 3.7 |  |  | 0.3 |  |  | 1.4 |  |  | — |
Net investment hedge |  | Other income (expense), net |  | (9.2 | ) |  | — |  |  | — |  |  | — |
Foreign exchange contracts |  | Net sales |  | (0.1 | ) |  | — |  |  | — |  |  | — |
Foreign exchange contracts |  | Cost of goods sold |  | (4.4 | ) |  | (0.1 | ) |  | 2.9 |  |  | — |
|  |  |  | $ | (10.4 | ) |  | $ | 0.2 |  |  | $ | 3.6 |  |  | $ | — |
Six months ended March 31, 2018 |  | Classification |  | Effective Portion |  | Ineffective Portion
|  |  |  | Gain (Loss) in AOCI |  | Gain (Loss) reclassified to Continuing Operations |  | Reclassified to Discontinued Operations |  | Discontinued Operations
Interest rate swaps |  | Interest expense |  | $ | 3.8 |  |  | $ | — |  |  | $ | 0.3 |  |  | $ | 0.6 |
Commodity swaps |  | Cost of goods sold |  | 1.2 |  |  | 0.6 |  |  | 2.5 |  |  | — |
Net investment hedge |  | Other income (expense), net |  | (21.8 | ) |  | — |  |  | — |  |  | — |
Foreign exchange contracts |  | Net sales |  | — |  |  | 0.1 |  |  | — |  |  | — |
Foreign exchange contracts |  | Cost of goods sold |  | (2.4 | ) |  | (0.3 | ) |  | (8.9 | ) |  | — |
|  |  |  | $ | (19.2 | ) |  | $ | 0.4 |  |  | $ | (6.1 | ) |  | $ | 0.6 |
Six months ended March 31, 2017 |  | Classification |  | Effective Portion |  | Ineffective Portion
|  |  |  | Gain (Loss) in AOCI |  | Gain (Loss) reclassified to Continuing Operations |  | Reclassified to Discontinued Operations |  | Discontinued Operations
Interest rate swaps |  | Interest expense |  | $ | (0.3 | ) |  | $ | — |  |  | $ | (1.0 | ) |  | $ | — |
Commodity swaps |  | Cost of goods sold |  | 3.8 |  |  | 0.3 |  |  | 2.2 |  |  | — |
Net investment hedge |  | Other income (expense), net |  | 23.3 |  |  | — |  |  | — |  |  | — |
Foreign exchange contracts |  | Net sales |  | 0.1 |  |  | — |  |  | — |  |  | — |
Foreign exchange contracts |  | Cost of goods sold |  | 5.9 |  |  | — |  |  | 7.1 |  |  | — |
|  |  |  | $ | 32.8 |  |  | $ | 0.3 |  |  | $ | 8.3 |  |  | $ | — |
The following table summarizes Spectrum Brands’ loss associated with derivative contracts not designated as hedges in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2018 and 2017:
|  |  |  | Three months ended March 31, |  | Six months ended March 31,
|  | Classification |  | 2018 |  | 2017 |  | 2018 |  | 2017
Foreign exchange contracts |  | Other income (expense), net |  | $ | 2.4 |  |  | $ | (1.2 | ) |  | $ | 2.7 |  |  | $ | (3.3 | )

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 -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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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=64837297&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