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Other Comprehensive Income (Loss)
 3 Months Ended
Dec. 31, 2018
Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Other Comprehensive Income (Loss)
Other Comprehensive Income (Loss)

The following tables represents the changes in Accumulated other comprehensive income (loss) by component:
 
Quarter Ended December 31, 2018
 
Other comprehensive income (loss)
 
Prior to
reclassification
 
Reclassification
from
 
Pre-tax
 
Tax effect
 
Net of tax
Derivative instruments and hedges:
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts1
$
1.2

 
$
(0.1
)
 
$
1.1

 
$
(0.4
)
 
$
0.7

Interest rate swaps2
(5.1
)
 
(2.1
)
 
(7.2
)
 
1.9

 
(5.3
)
Cross-currency swaps2
2.2

 
—

 
2.2

 
(1.3
)
 
0.9

Derivative instruments and hedges total
(1.7
)
 
(2.2
)
 
(3.9
)
 
0.2

 
(3.7
)
Foreign currency translation adjustment
(13.6
)
 
—

 
(13.6
)
 
—

 
(13.6
)
Change in pension and postretirement defined benefit plans
—

 
0.5

 
0.5

 
(0.1
)
 
0.4

Total
$
(15.3
)
 
$
(1.7
)
 
$
(17.0
)
 
$
0.1

 
$
(16.9
)

 
December 31, 2018
 
Accumulated other comprehensive income (loss)
 
Beginning
balance
 
Impacts of ASU 2018-02 Adoption
 
Net activity
 
Ending
balance3
Derivative instruments and hedges:
 
 
 
 
 
 
 
Foreign exchange forward contracts1
$
0.2

 
$
—

 
$
0.7

 
$
0.9

Interest rate swaps2
18.3

 
0.8

 
(5.3
)
 
13.8

Cross-currency swaps2
(1.7
)
 
—

 
0.9

 
(0.8
)
Derivative instruments and hedges total
16.8

 
0.8

 
(3.7
)
 
13.9

Foreign currency translation adjustment
(105.3
)
 
—

 
(13.6
)
 
(118.9
)
Change in pension and postretirement defined benefit plans
(24.5
)
 
(6.2
)
 
0.4

 
(30.3
)
Total
$
(113.0
)
 
$
(5.4
)
 
$
(16.9
)
 
$
(135.3
)

1We are subject to variability in foreign currency exchange rates due to our international operations. Exposure to this variability is periodically managed primarily through the use of natural hedges, whereby funding obligations and assets are both managed in the local currency. From time-to-time, we enter into currency exchange agreements to manage our exposure arising from fluctuating exchange rates related to specific and projected transactions. We operate this program pursuant to documented corporate risk management policies and do not enter into derivative transactions for speculative purposes. The sensitivity of earnings and cash flows to variability in exchange rates is assessed by applying an appropriate range of potential rate fluctuations to our assets, obligations and projected results of operations denominated in foreign currencies. Our currency risk consists primarily of foreign currency denominated firm commitments and projected foreign currency denominated intercompany and third-party transactions. As of December 31, 2018, the notional amount of open foreign exchange contracts was $69.9 million. These contracts were in a net asset position reported in Other current assets with a fair value of $1.7 million. The maximum length of time over which we hedge transaction exposures is generally 15 months. Derivative gains and losses, initially reported as a component of Accumulated other comprehensive income (loss), are reclassified to earnings in the period when the transaction affects earnings.

2 See Note 6 for information related to our interest rate and cross-currency swap agreements.

3The estimated net amount of gains and losses that are reported in Accumulated other comprehensive income (loss) as of December 31, 2018 that is expected to be reclassified into earnings within the next 12 months is $5.2 million.


 
Quarter Ended December 31, 2017
 
Other comprehensive income (loss)
 
Accumulated other comprehensive income (loss)
 
Prior to
reclassification
 
Reclassification
from
 
Pre-tax
 
Tax effect
 
Net of tax
 
Beginning
balance
 
Net activity
 
Ending
balance
Derivative instruments and hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
$
(0.9
)
 
$
0.4

 
$
(0.5
)
 
$
0.1

 
$
(0.4
)
 
$
(0.4
)
 
$
(0.4
)
 
$
(0.8
)
Interest rate swaps
6.7

 
(0.8
)
 
5.9

 
(2.1
)
 
3.8

 
4.7

 
3.8

 
8.5

Derivative instruments and hedges total
5.8

 
(0.4
)
 
5.4

 
(2.0
)
 
3.4

 
4.3

 
3.4

 
7.7

Foreign currency translation adjustment
6.1

 
—

 
6.1

 
—

 
6.1

 
(81.3
)
 
6.1

 
(75.2
)
Change in pension and postretirement defined benefit plans
(0.1
)
 
1.2

 
1.1

 
(0.3
)
 
0.8

 
(33.0
)
 
0.8

 
(32.2
)
Total
$
11.8

 
$
0.8

 
$
12.6

 
$
(2.3
)
 
$
10.3

 
$
(110.0
)
 
$
10.3

 
$
(99.7
)


The following table represents the items reclassified out of Accumulated other comprehensive income (loss) and the related tax effects:
 
 Quarter Ended December 31
 
2018
 
2017
 
Amount
reclassified
 
Tax effect4
 
Net of tax
 
Amount
reclassified
 
Tax effect
 
Net of tax
Derivative instruments and hedges:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts1
$
(0.1
)
 
$
0.1

 
$
—

 
$
0.4

 
$
(0.1
)
 
$
0.3

Interest rate swaps2
(2.1
)
 
0.6

 
(1.5
)
 
(0.8
)
 
0.3

 
(0.5
)
Derivative instruments and hedges total
(2.2
)
 
0.7

 
(1.5
)
 
(0.4
)
 
0.2

 
(0.2
)
Change in pension and postretirement defined benefit plans3
0.5

 
(6.3
)
 
(5.8
)
 
1.2

 
(0.3
)
 
0.9



1Reclassified from Accumulated other comprehensive income (loss) into Investment income and other, net.
2Reclassified from Accumulated other comprehensive income (loss) into Interest expense.
3Reclassified from Accumulated other comprehensive income (loss) into Cost of goods sold, Selling and administrative expenses and Investment income and other, net. These components are included in the computation of net periodic pension expense.
4As a result of the adoption of ASU 2018-02, we reclassified $5.4 million from Accumulated other comprehensive income (loss) to Retained earnings.