RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS

RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Strategy & Objectives

We are subject to market and financial risks related to interest rates, foreign currency, and commodities. In the normal course of business, we utilize derivative instruments (individually or in combinations) to manage these risks. We seek to use derivative contracts that qualify for hedge accounting treatment; however, some instruments may not qualify for this treatment. It is our policy not to speculate using derivative instruments.

Cash Flow Hedges

Derivative financial instruments that we use to hedge forecasted transactions and anticipated cash flows are as follows:

• Interest Rate Cash Flow Hedges - In August 2012, we issued $300 of 10-year notes with a coupon rate of 3.40%. As a part of this transaction, we settled our $200 forward starting interest rate swaps we had entered into during 2010 and recognized a loss of $42.7, which will be amortized out of accumulated other comprehensive income to interest expense over the life of the notes.

• Currency Cash Flow Hedges—The foreign currency hedges manage risk associated with exchange rate volatility of various currencies.

The effective changes in fair value of unexpired contracts are recorded in accumulated other comprehensive income and reclassified to income or expense in the period in which earnings are impacted. Cash flows from settled contracts are presented in the category consistent with the nature of the item being hedged. (Settlements associated with the sale or production of product are presented in operating cash flows and settlements associated with debt issuance are presented in financing cash flows).

Fair Value Hedges

Our fair value hedges typically manage foreign currency risk associated with subsidiaries’ inter-company assets and liabilities. Hedges designated as fair value hedges recognize gain or loss currently in earnings. Cash flows from settled contracts are presented in the category consistent with the nature of the item being hedged.

Hedge Effectiveness

We have deemed ineffectiveness to be immaterial, and as a result, have not recorded any amounts for ineffectiveness. If a hedge was not highly effective, the portion of the change in fair value considered to be ineffective would be recognized immediately in the consolidated statements of operations.

We have recorded the following assets and liabilities representing the fair value for our most significant derivative financial instruments. The fair values of the derivatives reflect the change in the market value of the derivative from the date of the trade execution, and do not consider the offsetting underlying hedged item.

	Expiring at various dates through:	Total USD Equivalent Notional Amount		As of June 30, 2016
				Assets		Liabilities
				Other Current Assets		Other Current Liabilities		Other Long-Term Liabilities
Derivatives designated as hedging instruments
Cash flow hedges:
Currency Hedges:
Future USD sales of Canadian, Chinese, European and Swiss subsidiaries	Dec 2017	$	139.5	$	—	$	4.4	$	.4
Future DKK sales of Polish subsidiary	Dec 2016	11.3		—		.3		—
Future USD purchases of Canadian, European, and South Korean subsidiaries	Dec 2017	11.2		—		.2		—
Future EUR sales of UK and Swiss subsidiaries	Dec 2017	11.0		—		.5		.1
Future MXN purchases of a USD subsidiary	Dec 2017	8.3		—		.6		.2
Future JPY sales of Chinese subsidiary	Dec 2017	4.9		—		.5		—
Total cash flow hedges				—		6.5		.7
Fair value hedges:
DKK inter-company note receivable on a USD subsidiary	Oct 2016	3.1		.1		—		—
USD inter-company note receivables on a CAD subsidiary	Sep 2016	17.0		—		.1		—
USD inter-company note receivable on a Swiss subsidiary	Aug 2016	8.0		.1		—		—
Total fair value hedges				.2		.1		—
Derivatives not designated as hedging instruments
Non-deliverable hedge on EUR exposure to CNY	Jun 2017	2.2		—		.1		—
Non-deliverable hedge on JPY exposure to CNY	Feb 2017	2.9		—		.3		—
Hedge of EUR Cash on UK subsidiaries	Aug 2016	1.9		.1		—		—
Total derivatives not designated as hedging instruments				.1		.4		—
				$	.3	$	7.0	$	.7

	Expiring at various dates through:	Total USD Equivalent Notional Amount		As of December 31, 2015
				Assets		Liabilities
				Other Current Assets		Other Current Liabilities		Other Long-Term Liabilities
Derivatives designated as hedging instruments
Cash flow hedges:
Currency Hedges:
Future USD sales of Canadian, Chinese and Swiss subsidiaries	Dec 2017	$	219.8	$	—	$	10.1	$	2.3
Future USD purchases of Canadian, European and South Korean subsidiaries	Dec 2017	16.8		.3		—		—
Future MXN purchases of a USD subsidiary	Dec 2017	7.3		—		.7		.3
Future JPY sales of a Chinese subsidiary	Dec 2016	3.8		—		.1		—
Future DKK sales of a Polish subsidiary	Dec 2016	15.6		—		.1		—
Future EUR sales of Chinese, Swiss and UK subsidiaries	May 2017	13.6		—		.1		—
Total cash flow hedges				.3		11.1		2.6
Fair value hedges:
DKK inter-company note receivable on USD subsidiary	May 2016	1.7		.1		—		—
USD inter-company note receivable on a CAD subsidiary	Jan 2016	9.0		—		.5		—
USD inter-company note receivable on a Swiss subsidiary	Aug 2016	8.0		—		.1		—
Total fair value hedges				.1		.6		—
Derivatives not designated as hedging instruments
Non-deliverable hedge on USD exposure to CNY	Dec 2016	11.0		—		.3		—
Non-deliverable hedge on EUR exposure to CNY	Dec 2016	2.2		—		.1		—
Non-deliverable hedge on JPY exposure to CNY	Dec 2016	2.5		—		.1		—
Hedge of DKK cash on USD subsidiary	Apr 2016	3.0		.1		—		—
Hedge of EUR Cash on UK subsidiaries	Jan 2016	8.3		.1		—		—
Total derivatives not designated as hedging instruments				.2		.5		—
				$	.6	$	12.2	$	2.6

The following table sets forth the pre-tax (gains) losses from continuing operations for our hedging activities for the years presented. This schedule includes reclassifications from accumulated other comprehensive income (see Note 12) as well as derivative settlements recorded directly to income or expense.

	Income Statement Caption	Amount of (Gain) Loss Recorded in Income Six Months Ended June 30,						Amount of (Gain) Loss Recorded in Income Three Months Ended June 30,
		2016			2015			2016			2015
Derivatives designated as hedging instruments
Interest rate cash flow hedges	Interest expense	$	2.1		$	2.0		$	1.1		$	1.0
Foreign currency cash flow hedges	Net sales	5.2			(.5		)	2.1			(.5		)
Foreign currency cash flow hedges	Cost of goods sold	.4			(.8		)	.3			(.4		)
Total cash flow hedges		7.7			.7			3.5			.1
Fair value hedges	Other (income) expense, net	(1.8		)	(.2		)	(.5		)	(.9		)
Derivatives not designated as hedging instruments
Hedge of USD cash-UK and Swiss subsidiaries	Other (income) expense, net	—			(.1		)	—			—
Hedge of EUR cash-USD, UK and Swiss subsidiaries	Other (income) expense, net	(.4		)	.9			(.2		)	.2
Hedge of DKK cash-USD subsidiary	Other (income) expense, net	—			(.1		)	(.1		)	(.1		)
Hedge of GBP cash-USD subsidiary	Other (income) expense, net	.1			—			.1			—
Non-deliverable hedge on USD exposure to CNY	Other (income) expense, net	(.2		)	(.1		)	(.1		)	(.1		)
Non-deliverable hedge on EUR exposure to CNY	Other (income) expense, net	—			—			.1			—
Non-deliverable hedge on JPY exposure to CNY	Other (income) expense, net	.3			—			.4			—
Total derivative instruments		$	5.7		$	1.1		$	3.2		$	(.8	)