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 or 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 risk when it is practical and economical to do so. The use of these contracts minimizes transactional exposure to exchange rate changes. 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. Changes in the fair value of interest rate contracts considered cash flow hedges are reported as a component of other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings.

The following table presents the fair value of asset and liability derivatives and the respective balance sheet locations at September 30, 2014 ($ 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	$	1.4	Accrued Expenses	$	3.2
Foreign exchange contracts	Other Assets	—		Other Liabilities	0.6
Interest rate contracts	Other Assets	—		Other Liabilities	—
Total derivatives designated as hedges		$	1.4		$	3.8

The following table presents the fair value of asset and liability derivatives and the respective balance sheet locations at December 31, 2013 ($ 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	$	—	Accrued Expenses	$	6.5
Foreign exchange contracts	Other Assets	—		Other Liabilities	2.1
Interest rate contracts	Other Assets	0.5		Other Liabilities	—
Total derivatives designated as hedges		$	0.5		$	8.6

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



Derivatives Designated as Cash Flow Hedging Relationships	Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax											(Loss) Gain Reclassified from AOCI
	Three Months Ended					Nine Months Ended						Three Months Ended					Nine Months Ended
	September 30,					September 30,						September 30,					September 30,
	2014			2013		2014			2013			2014			2013		2014			2013
Foreign exchange contracts	$	(1.3	)	$	0.4	$	6.5		$	(4.8	)	$	(0.8	)	$	0.6	$	(3.0	)	$	0.1
Interest rate contracts	0.2			—		(0.3		)	—			—			—		—			—
Total	$	(1.1	)	$	0.4	$	6.2		$	(4.8	)	$	(0.8	)	$	0.6	$	(3.0	)	$	0.1

The Company's designated derivative instruments are highly effective. As such, related to the hedge ineffectiveness or amounts excluded from hedge effectiveness testing, there were no gains or losses recognized immediately in income for the three or nine months ended September 30, 2014 and 2013.

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



Derivatives Not Designated as Cash Flow Hedging Instruments	Amount of Gain / (Loss) Recognized in Other Income / Expense
	Three Months Ended					Nine Months Ended
	September 30, 2014			September 30, 2013		September 30, 2014			September 30, 2013
Foreign exchange contracts	$	(0.4	)	$	0.8	$	(0.3	)	$	—