DERIVATIVE FINANCIAL INSTRUMENTS

Cash Flow Hedges

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

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

We have also occasionally used interest rate cash flow hedges to manage interest rate risks.

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 and Derivatives not Designated as Hedging Instruments

These derivatives typically manage foreign currency risk associated with subsidiaries’ assets and liabilities, and gains or losses are recognized 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, 2017
				Assets		Liabilities
				Other Current Assets		Other Current Liabilities
Derivatives designated as hedging instruments
Cash flow hedges:
Currency hedges:
Future USD sales of Canadian, Chinese, European and Swiss subsidiaries	Jun 2018	$	91.8	$	1.3	$	—
Future DKK sales of Polish subsidiary	Dec 2017	4.7		.3		—
Future USD purchases of Canadian, European and South Korean subsidiaries	Dec 2017	5.9		—		.1
Future EUR sales of UK, Chinese and Swiss subsidiaries	Dec 2017	20.3		—		.4
Future MXN purchases of a USD subsidiary	Dec 2017	2.9		—		.1
Future JPY sales of Chinese subsidiary	Jun 2018	4.0		.1		—
Total cash flow hedges				1.7		.6
Fair value hedges:
USD inter-company note receivables on a CAD subsidiary	Aug 2017	7.0		.1		—
ZAR inter-company note receivable on a USD subsidiary	Dec 2017	2.3		—		.4
USD inter-company note receivable on a Swiss subsidiary	Aug 2017	5.5		.3		—
Total fair value hedges				.4		.4
Derivatives not designated as hedging instruments
USD receivable on a CAD subsidiary	Jul 2017	8.0		.2		—
Hedge of USD Cash on EUR subsidiary	Jul 2017	5.0		.1		—
Total derivatives not designated as hedging instruments				.3		—
				$	2.4	$	1.0



	Expiring at various dates through:	Total USD Equivalent Notional Amount		As of December 31, 2016
				Assets		Liabilities
				Other Current Assets		Other Current Liabilities
Derivatives designated as hedging instruments
Cash flow hedges:
Currency hedges:
Future USD sales of Canadian, Chinese and Swiss subsidiaries	Dec 2017	$	80.4	$	—	$	2.4
Future USD purchases of European subsidiaries	Dec 2017	3.8		.1		—
Future MXN purchases of a USD subsidiary	Dec 2017	5.8		—		.9
Future JPY sales of a Chinese subsidiary	Dec 2017	3.5		.3		—
Future DKK sales of a Polish subsidiary	Mar 2017	10.1		.1		—
Future EUR sales of Chinese, Swiss and UK subsidiaries	Dec 2017	6.4		—		.2
Total cash flow hedges				.5		3.5
Fair value hedges:
USD inter-company note receivable on a CAD subsidiary	Jan 2017	24.0		.2		.1
PLN inter-company note receivable on GBP subsidiary	Jun 2017	2.3		.1		—
ZAR inter-company note receivable on a USD subsidiary	Dec 2017	2.3		—		.1
Total fair value hedges				.3		.2
Derivatives not designated as hedging instruments
Non-deliverable hedge on USD exposure to CNY	Dec 2017	19.0		—		.3
Hedge of EUR Cash on USD subsidiary	Jan 2017	5.9		—		.1
Total derivatives not designated as hedging instruments				—		.4
				$	.8	$	4.1

The following table sets forth the pre-tax (gains) losses 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.



	Caption in Statement of Operations	Amount of (Gain) Loss Recorded in Income Six Months Ended June 30,						Amount of (Gain) Loss Recorded in Income Three Months Ended June 30,
	Caption in Statement of Operations	2017			2016			2017			2016
Derivatives designated as hedging instruments
Interest rate cash flow hedges	Interest expense	$	2.1		$	2.1		$	1.0		$	1.1
Currency cash flow hedges	Net sales	1.4			5.2			.1			2.1
Currency cash flow hedges	Cost of goods sold	.1			.4			—			.3
Total cash flow hedges		3.6			7.7			1.1			3.5
Fair value hedges	Other (income) expense, net	(.4		)	(1.8		)	(.5		)	(.5		)

Derivatives not designated as hedging instruments	Other (income) expense, net	(.7		)	(.2		)	(.7		)	.2
Total derivative instruments		$	2.5		$	5.7		$	(.1	)	$	3.2