FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table presents the fair value for those assets and (liabilities) measured on a recurring basis as of April 30, 2018 and October 31, 2017:



	April 30, 2018
	Fair Value Measurement
(in millions)	Level 1		Level 2			Level 3		Total			Balance Sheet Location
Interest rate derivatives	$	—	$	16.0		$	—	$	16.0		Other long-term assets and other current assets
Foreign exchange hedges	—		0.4			—		0.4			Other current assets
Foreign exchange hedges	—		(1.4		)	—		(1.4		)	Other current liabilities
Insurance annuity	—		—			21.5		21.5			Other long-term assets
Cross currency swap	—		(1.9		)	—		(1.9		)	Other long-term liabilities
Cross currency swap	—		2.0			—		2.0			Other current assets
Total	$	—	$	15.1		$	21.5	$	36.6



	October 31, 2017
	Fair Value Measurement
(in millions)	Level 1		Level 2			Level 3		Total			Balance Sheet Location
Interest rate derivatives	$	—	$	8.9		$	—	$	8.9		Other long-term assets and other current assets
Foreign exchange hedges	—		0.1			—		0.1			Other current assets
Foreign exchange hedges	—		(0.6		)	—		(0.6		)	Other current liabilities
Insurance annuity	—		—			20.7		20.7			Other long-term assets
Total	$	—	$	8.4		$	20.7	$	29.1

The carrying amounts of cash and cash equivalents, trade accounts receivable, accounts payable, current liabilities and short-term borrowings as of April 30, 2018 and October 31, 2017 approximate their fair values because of the short-term nature of these items and are not included in this table.

Interest Rate Derivatives

The Company has various borrowing facilities which charge interest based on the one month U.S. dollar LIBOR rate plus an interest spread. During the first quarter of 2017, the Company entered into a forward interest rate swap with a notional amount of $300.0 million. As of February 1, 2017, the Company began to receive variable rate interest payments based upon one month U.S. dollar LIBOR and in return was obligated to pay interest at a fixed rate of 1.194%. This effectively converted the borrowing rate on $300.0 million of debt from a variable rate to a fixed rate. This derivative is designated as a cash flow hedge for accounting purposes. Accordingly, the gain or loss on this derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. For additional disclosures of the gain or loss included within other comprehensive income, see also Note 15 to the interim condensed consolidated financial statements. The assumptions used in measuring fair value of the interest rate derivative are considered level 2 inputs, which are based upon LIBOR and interest paid based upon a designated fixed rate over the life of the swap agreements.

Gains reclassified to earnings under these contracts were $0.4 million for the three months ended April 30, 2018, and losses reclassified to earnings under these contracts were $0.3 million for the three months ended April 30, 2017. Gains reclassified to earnings under these contracts were $0.5 million for the six months ended April 30, 2018, and losses reclassified to earnings under these contracts were $0.3 million for the six months ended April 30, 2017. A derivative gain of $3.2 million, based upon interest rates at April 30, 2018, is expected to be reclassified from other comprehensive income (loss) to earnings in the next twelve months.

Foreign Exchange Hedges

The Company conducts business in various international currencies and is subject to risks associated with changing foreign exchange rates. The Company’s objective is to reduce volatility associated with foreign exchange rate changes. Accordingly, the Company enters into various contracts that change in value as foreign exchange rates change to protect the value of certain existing foreign currency assets and liabilities, commitments and anticipated foreign currency cash flows. As of April 30, 2018, the Company had outstanding foreign currency forward contracts in the notional amount of $119.8 million ($80.1 million as of October 31, 2017). Adjustments to fair value are recognized in earnings, offsetting the impact of the hedged profits. The assumptions used in measuring fair value of foreign exchange hedges are considered level 2 inputs, which were based on observable market pricing for similar instruments, principally foreign exchange futures contracts.

Realized losses recorded in other expense, net under fair value contracts were $1.6 million and $0.3 million for the three months ended April 30, 2018 and 2017, respectively. Realized losses recorded in other expense, net under fair value contracts were $2.1 million and $1.5 million for the six months ended April 30, 2018 and 2017, respectively. The Company recognized in other expense, net an unrealized net gain of $2.0 million and zero during the three months ended April 30, 2018 and 2017, respectively. The Company recognized in other expense, net an unrealized net loss of $1.1 million and $1.5 million during the six months ended April 30, 2018 and 2017, respectively.

Cross Currency Swap

The Company has operations and investments in various international locations and is subject to risks associated with changing foreign exchange rates. On March 6, 2018, the Company entered into a cross currency interest rate swap agreement that synthetically swaps $100.0 million of fixed rate debt to Euro denominated fixed rate debt at a rate of 2.352%. The agreement is designated as a net investment hedge for accounting purposes and will mature on March 6, 2023. Accordingly, the gain or loss on this derivative instrument is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. Coupons received for the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense, net on the condensed consolidated statements of income. For the three and six months ended April 30, 2018, gains recorded in interest expense, net under the cross currency swap agreement were $0.4 million. For additional disclosure of the gain or loss included within other comprehensive income, see also Note 15 to the interim condensed consolidated financial statements. The assumptions used in measuring fair value of the cross currency swap are considered level 2 inputs, which are based upon the Euro to United States Dollar exchange rate market.

Other Financial Instruments

The fair values of the Company’s 2017 Credit Agreement and the Receivables Facility do not materially differ from carrying value as the Company’s cost of borrowing is variable and approximates current borrowing rates. The fair values of the Company’s long-term obligations are estimated based on either the quoted market prices for the same or similar issues or the current interest rates offered for the debt of the same remaining maturities, which are considered level 2 inputs in accordance with ASC Topic 820, "Fair Value Measurements and Disclosures."

The following table presents the estimated fair values of the Company’s senior notes:



(in millions)	April 30, 2018		October 31, 2017
Senior Notes due 2019 estimated fair value	$	262.2	$	272.0
Senior Notes due 2021 estimated fair value	287.4		281.0
Assets held by special purpose entities estimated fair value	51.3		52.5

Non-Recurring Fair Value Measurements

The following table presents quantitative information about the significant unobservable inputs used to determine the fair value of the impairment of long-lived assets held and used and net assets held for sale for the six months ended April 30, 2018 and 2017:



	Quantitative Information about Level 3 Fair Value Measurements
(in millions)	Fair Value of Impairment		Valuation Technique	Unobservable Input	Range of Input Values
April 30, 2018
Impairment of Net Assets Held for Sale	$	0.4	Discounted Cash Flows	Discounted Cash Flows	N/A
Impairment of Long Lived Assets	2.9		Discounted Cash Flows	Discounted Cash Flows	N/A
Total	$	3.3

April 30, 2017
Impairment of Net Assets Held for Sale	$	3.6	Broker Quote/ Indicative Bids	Indicative Bids	N/A
Impairment of Long Lived Assets	0.3		Sales Value	Sales Value	N/A
Total	$	3.9

Long-Lived Assets

The Company recognized asset impairment charges of $3.3 million during the six months ended April 30, 2018 and $3.9 million for the six months ended April 30, 2017. As a result of the Company measuring long-lived assets at fair value on a non-recurring basis, during the six months ended April 30, 2018, the Company recorded impairment charges related to properties, plants and equipment, net, of $1.9 million and charges related to intangible assets of $1.4 million in the Rigid Industrial Packaging & Services segment.

The assumptions used in measuring fair value of long-lived assets are considered level 3 inputs, which include bids received from third parties, recent purchase offers, market comparable information and discounted cash flows based on assumptions that market participants would use.

Assets and Liabilities Held for Sale

During the six month period ended April 30, 2018, one asset group was reclassified to assets and liabilities held for sale, resulting in a $0.4 million impairment to net realizable value. During the six month period ended April 30, 2017, one asset group was reclassified to assets and liabilities held for sale, resulting in $3.6 million impairment to net realizable value.

The assumptions used in measuring fair value of assets and liabilities held for sale are considered level 3 inputs, which include recent purchase offers, market comparables and/or data obtained from commercial real estate brokers.