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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 12 Months Ended
Dec. 31, 2017
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

NOTE 5 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to global market risks, including risks from changes in FX rates and changes in interest rates. Accordingly, the Company uses derivatives in certain instances to manage the aforementioned financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for speculative purposes.

Derivatives and non-derivative instruments designated as accounting hedges:

Interest Rate Swaps

The Company has entered into interest rate swaps to convert the fixed interest rate on certain of its long-term debt to a floating interest rate based on the 3-month LIBOR. The purpose of these hedges is to mitigate the risk associated with changes in the fair value of the long-term debt, thus the Company has designated these swaps as fair value hedges. The fair value of the swaps is adjusted quarterly with a corresponding adjustment to the carrying value of the debt. The changes in the fair value of the swaps and the underlying hedged item generally offset and the net cash settlements on the swaps are recorded each period within interest expense, net in the Company’s consolidated statement of operations.

The following table summarizes the Company’s interest rate swaps designated as fair value hedges:

Hedged ItemNature of SwapNotional AmountAs of December 31,Floating Interest Rate
20172016
2010 Senior Notes due 2020Pay Floating/Receive Fixed$500.0$500.03-month LIBOR
2014 Senior Notes due 2019Pay Floating/Receive Fixed$450.0$450.03-month LIBOR
2012 Senior Notes due 2022Pay Floating/Receive Fixed$80.0$80.03-month LIBOR

The following table summarizes the impact to the statement of operations of the Company’s interest rate swaps designated as fair value hedges:

Amount of Income Recognized in the Consolidated Statements of Operations
Year Ended December 31,
Derivatives Designated as Fair Value Accounting HedgesLocation on Consolidated Statement of Operations201720162015
Interest rate swaps Interest expense, net$6.7$11.2$15.2

Cross-currency swaps

In conjunction with the issuance of the 2015 Senior Notes, the Company entered into a cross-currency swap to exchange €100 million for U.S. dollars on the date of the settlement of the notes. The purpose of this cross-currency swap was to mitigate FX risk on the remaining principal balance on the 2015 Senior Notes that initially was not designated as a net investment hedge. Under the terms of the swap, the Company paid the counterparty interest on the $110.5 million received at 3.945% per annum and the counterparty paid the Company interest on the €100 million paid at 1.75% per annum. These interest payments were settled in March of each year, beginning in 2016, until either the maturity of the cross-currency swap in 2027 or upon early termination at the discretion of the Company. The principal payments on this cross currency swap were to be settled in 2027, concurrent with the repayment of the 2015 Senior Notes at maturity or upon early termination at the discretion of the Company. In March 2016, the Company designated these cross-currency swaps as cash flow hedges. Accordingly, changes in fair value subsequent to the date the swaps were designated as cash flow hedges were recognized in OCI. Gains and losses on the swaps initially recognized in OCI were reclassified to the statement of operations in the period in which changes in the underlying hedged item affects net income. On December 18, 2017, the Company terminated the cross-currency swap and designated the full €500 million principal of the 2015 Senior Notes as a net investment hedge as discussed below.

Net Investment Hedges

The Company had entered into foreign currency forward contracts that were designated as net investment hedges which were discontinued during 2017. Additionally, the Company has designated €500 million of the 2015 Senior Notes Due 2027 as a net investment hedge. These hedges are intended to mitigate FX exposure related to non-U.S. dollar net investments in certain foreign subsidiaries against changes in foreign exchange rates. These net investment hedges are designated as accounting hedges under the applicable sections of Topic 815 of the ASC. The net investment hedge relating to the 2015 Senior Notes will end upon the repayment of the notes in 2027 unless terminated earlier at the discretion of the Company.

Hedge effectiveness is assessed based on the overall changes in the fair value of the hedge. For hedges that meet the effectiveness requirements, any change in the fair value is recorded in OCI in the foreign currency translation account. Any change in the fair value of the Company’s outstanding net hedges that is the result of ineffectiveness would be recognized immediately in other non-operating (expense) income, net in the Company’s consolidated statement of operations.

The following table summarizes the notional amounts of the Company’s outstanding forward contracts that were designated as net investment hedges:

December 31,December 31,
20172016
Notional amount of net investment hedges:SellBuySellBuy
Contracts to sell GBP for euros£-€-£22.1€26.4

The following table provides information on the gains/(losses) on the Company’s net investment and cash flow hedges:

Amount of Gain/(Loss) Recognized in AOCI on Derivative (Effective Portion), net of TaxAmount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion), net of tax
Derivatives and Non-Derivative Instruments in Net Investment Hedging RelationshipsYear Ended December 31,Year Ended December 31,
201720162015201720162015
FX forwards$1.2$(12.0)$13.4$-$-$-
Long-term debt(37.2)7.84.7---
Total net investment hedges$(36.0)$(4.2)$18.1$-$-$-
Derivatives in Cash Flow Hedging Relationships
Cross currency swap$6.3$(0.9)$-$7.8*$(3.7)*$-
Interest rate contracts(0.4)-(1.1)(1.1)--
Total cash flow hedges5.9(0.9)(1.1)6.7(3.7)-
Total $(30.1)$(5.1)$17.0$6.7$(3.7)$-
* Reflects $12.6 million in gains and $6 million in losses in 2017 and 2016, respectively, recorded in other non-operating income (expense), net of $4.8 million and $2.3 million in 2017 and 2016, respectively, relating to the tax effect of the aforementioned items.

The cumulative amount of realized and unrecognized net investment and cash flow hedge gains/(losses) recorded in AOCI is as follows:

Cumulative Gains/(Losses), net of tax
December 31,December 31,
20172016
Net investment hedges
FX forwards$23.5$22.3
Long-term debt (24.7)12.5
Total net investment hedges$(1.2)$34.8
Cash flow hedges
Interest rate contracts$(0.4)$(1.1)
Cross currency swap1.32.8
Total losses on cash flow hedges0.91.7
Total net (losses) gains in AOCI$(0.3)$36.5

Derivatives not designated as accounting hedges:

Foreign exchange forwards

The Company also enters into foreign exchange forwards to mitigate the change in fair value on certain assets and liabilities denominated in currencies other than a subsidiary’s functional currency. These forward contracts are not designated as accounting hedges under the applicable sections of Topic 815 of the ASC. Accordingly, changes in the fair value of these contracts are recognized immediately in other non-operating (expense), income net in the Company’s consolidated statements of operations along with the FX gain or loss recognized on the assets and liabilities denominated in a currency other than the subsidiary’s functional currency. These contracts have expiration dates at various times through May 2018.

The following table summarizes the notional amounts of the Company’s outstanding foreign exchange forwards:

December 31,December 31,
20172016
Notional Amount of Currency Pair:SellBuySellBuy
Contracts to sell USD for GBP$484.7£362.3$-£-
Contracts to sell USD for Japanese Yen$24.3¥2,700.0$-¥-
Contracts to sell USD for Canadian dollars$51.7C$64.0$-C$-
Contracts to sell Singapore dollars for EURS$-€-S$55.5€36.0
Contracts to sell euros for GBP€-£-€31.0£25.9
Contracts to sell USD for Singapore dollars$39.2S$53.0$-S$-
Contracts to sell USD for EUR$465.2€390.0$-€-
NOTE: € = Euro, £ = British pound, S$ = Singapore dollar, $ = U.S. dollar, ¥ = Japanese Yen, C$ = Canadian dollar

Foreign Exchange Options and forward contracts relating to the acquisition of Bureau van Dijk

The Company entered into a foreign currency collar consisting of option contracts to economically hedge the Bureau van Dijk euro denominated purchase price (as further discussed in Note 7). These option contracts were not designated as accounting hedges under the applicable sections of Topic 815 of the ASC. The foreign currency option contracts consisted of separate put and call options each in the aggregate notional amount of €2.7 billion. This collar was settled at the end of July 2017, in advance of the August 10, 2017 closing of the Bureau van Dijk acquisition.

The Company entered into foreign exchange forwards to hedge the Bureau van Dijk purchase price for the period from the settlement of the aforementioned foreign currency collar until the closing date on August 10, 2017. These forward contracts were not designated as accounting hedges under the applicable sections of Topic 815 of the ASC. The foreign exchange contracts were to sell $2.8 billion and buy €2.4 billion and sell $41 million and buy £31 million.

The following table summarizes the impact to the consolidated statements of operations relating to the net gain (loss) on the Company’s derivatives which are not designated as hedging instruments:

Year Ended December 31,
Derivatives Not Designated as Accounting HedgesLocation on Statement of Operations201720162015
Foreign exchange forwardsOther non-operating income, net$21.5$(7.2)$(2.8)
Foreign exchange forwards relating to Bureau van Dijk acquisitionPurchase Price Hedge Gain10.3--
FX collar relating to Bureau van Dijk acquisitionPurchase Price Hedge Gain100.8--
$132.6$(7.2)$(2.8)

The table below shows the classification between assets and liabilities on the Company’s consolidated balance sheets for the fair value of the derivative instrument as well as the carrying value of its non-derivative debt instruments designated and qualifying as net investment hedges:

Derivative and Non-derivative Instruments
Balance Sheet LocationDecember 31, 2017December 31, 2016
Assets:
Derivatives designated as accounting hedges:
FX forwards on net investment in certain foreign subsidiariesOther current assets$-$0.6
Interest rate swapsOther assets0.57.0
Total derivatives designated as accounting hedges0.57.6
Derivatives not designated as accounting hedges:
FX forwards on certain assets and liabilitiesOther current assets12.5-
Total assets$13.0$7.6
Liabilities:
Derivatives designated as accounting hedges:
Cross-currency swapOther non-current liabilities$-$3.8
Interest rate swapsOther non-current liabilities3.50.8
Total derivatives designated as accounting hedges3.54.6
Non-derivative instrument designated as accounting hedge:
Long-term debt designated as net investment hedgeLong-term debt600.4421.9
Derivatives not designated as accounting hedges:
FX forwards on certain assets and liabilitiesAccounts payable and accrued liabilities2.00.8
Total liabilities$605.9$427.3