Derivatives

In the normal course of business, the Company is exposed to foreign currency exchange rate risk and interest rate risk on its variable-rate debt. To manage these risks, the Company utilizes a variety of practices including, where considered appropriate, derivative instruments. The Company has no derivative instruments for trading or speculative purposes nor any derivatives with credit risk related contingent features. All derivative instruments used by the Company are either exchange traded or are entered into with major financial institutions in order to reduce credit risk and risk of nonperformance by third parties. The fair values of the Company’s derivative instruments are determined using observable inputs and are considered Level 2 assets or liabilities.

The Company utilizes currency forward, swap and, to a lesser extent, option contracts to selectively hedge its exposure to foreign currency transaction risk when it is practical and economical to do so. The use of these contracts minimizes transactional exposure to exchange rate changes. Usually, these contracts extend for no more than 12 months. We designate certain of our foreign currency hedges as cash flow hedges. Changes in the fair value of cash flow hedges are reported as a component of other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings. For foreign exchange contracts not designated as cash flow hedges, changes in the contracts’ fair value are recorded to net income each period.

The Company selectively hedges its exposure to interest rate increases on variable-rate, long-term debt when it is practical and economical to do so. The Company utilizes various forms of interest rate hedge agreements, including interest rate swap agreements, typically with contractual terms no longer than 24 months. Changes in the fair value of our interest rate swaps are recorded to net income each period. See Note 8. Debt for more information about our interest rate swaps.

The following table presents the fair value of asset and liability derivatives and the respective balance sheet locations at March 31, 2012 ($ in millions):



	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:
Foreign exchange contracts	Accounts Receivable	$	2.7	Accounts Payable	$	—
Foreign exchange contracts	Other Assets	1.8		Other Liabilities	1.8
Total derivatives designated as hedges		$	4.5		$	1.8

The following table presents the fair value of asset and liability derivatives and the respective balance sheet locations at December 31, 2011 ($ in millions):



	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:
Foreign exchange contracts	Accounts Receivable	$	1.6	Accounts Payable	$	—
Foreign exchange contracts	Other Assets	1.0		Other Liabilities	3.2
Total derivatives designated as hedges		2.6			3.2

Derivatives not designated as hedges:
Interest rate contracts	Other Assets	—		Other Liabilities	0.1
Foreign exchange contracts	Accounts Receivable	0.1		Accounts Payable	—
Total derivatives not designated as hedges		0.1			0.1
Total derivatives		$	2.7		$	3.3

The following table provides the effect derivative instruments in cash flow hedging relationships had on accumulated other comprehensive income (loss), or AOCI, and results of operations for the three months ended March 31 ($ in millions):



Derivatives Designated as Cash Flow Hedging Relationships	Gain Recognized in AOCI on Derivatives, Net of Tax				Location of Gain Reclassified from AOCI into Income	Gain Reclassified from AOCI into Income
	Three Months Ended					Three Months Ended
	March 31, 2012		March 31, 2011			March 31, 2012		March 31, 2011
Foreign exchange contracts	$	2.1	$	1.5	Net Sales	$	1.2	$	1.4

The Company's designated derivative instruments are perfectly effective. As such, there were no gains or losses, related to the hedge ineffectiveness or amounts excluded from hedge effectiveness testing, recognized immediately in income for the three months ended March 31, 2012 and 2011.

The following table provides the effect derivative instruments not designated as hedging instruments had on net income ($ in millions):



Derivatives Not Designated as Cash Flow Hedging Instruments	Location of Gain / (Loss) Recognized in Income on Derivatives	Amount of Gain / (Loss) Recognized in Income on Derivatives for the three months ended March 31,
		2012			2011
Interest rate contracts	Other Income / Expense	$	(0.1	)	$	0.1
Foreign exchange contracts	Other Income / Expense	(2.5		)	(1.2		)
Total		$	(2.6	)	$	(1.1	)