| 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.
Interest Rate Cash Flow Hedges—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.
The following table presents assets and liabilities representing the fair value of 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 December 31, 2019 | Derivatives Designated as Hedging Instruments | | | Assets | | Liabilities | | Other Current Assets | | Sundry | | Other Current Liabilities | Cash flow hedges: | | | | | | | | | | | Currency hedges: | | | | | | | | | | | Future USD sales/purchases of Canadian, Chinese, European, South Korean, Swiss and UK subsidiaries | | Sep 2021 | | $ | 138.5 |
| | $ | 1.3 |
| | $ | .2 |
| | $ | .7 |
| Future MXN purchases of a USD subsidiary | | Jun 2021 | | 9.8 |
| | .5 |
| | .1 |
| | — |
| Future DKK sales of Polish subsidiary | | Jun 2021 | | 21.1 | | .3 |
| | — |
| | — |
| Future EUR Sales of Chinese and UK subsidiaries | | Jun 2021 | | 29.9 |
| | .7 |
| | — |
| | — |
| Total cash flow hedges | | | | | | 2.8 |
| | .3 |
| | .7 |
| Fair value hedges: | | | | | | | | | | | Intercompany and third party receivables and payables exposed to multiple currencies (DKK, EUR, MXN, USD and ZAR) in various countries (CAD, CHF, CNY, GBP, PLN and USD) | | May 2020 | | 112.0 | | .8 |
| | — |
| | .1 |
| Total fair value hedges | | | | | | .8 |
| | — |
| | .1 |
| Derivatives not designated as hedging instruments | | | | | | | | | Non-deliverable hedges (EUR and USD) exposed to the CNY | | Dec 2020 | | 10.1 | | .1 |
| | — |
| | — |
| Hedge of USD Receivable on CAD Subsidiary | | Jan 2020 | | 5.0 | | — |
| | — |
| | .1 |
| Total derivatives not designated as hedging instruments | | | | | | .1 |
| | — |
| | .1 |
| Total derivatives | | | | | | $ | 3.7 |
| | $ | .3 |
| | $ | .9 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | Expiring at various dates through: | | Total USD Equivalent Notional Amount | | As of December 31, 2018 | Derivatives Designated as Hedging Instruments | | | Assets | | Liabilities | | Other Current Assets | | Sundry | | Other Current Liabilities | | Other Long-Term Liabilities | Cash flow hedges: | | | | | | | | | | | | | Currency hedges: | | | | | | | | | | | | | Future USD sales/purchases of Canadian, Chinese, European, South Korean, Swiss and UK subsidiaries | | Jun 2020 | | $ | 164.7 |
| | $ | .5 |
| | $ | .1 |
| | $ | 3.8 |
| | $ | .2 |
| Future MXN purchases of a USD subsidiary | | Jun 2019 | | 7.9 |
| | .1 |
| | — |
| | — |
| | — |
| Future EUR Sales of Chinese and UK subsidiaries | | Jun 2020 | | 32.3 | | .2 |
| | .1 |
| | .1 |
| | — |
| Total cash flow hedges | | | | | | .8 |
| | .2 |
| | 3.9 |
| | .2 |
| Fair value hedges: | | | | | | | | | | | | | Intercompany and third party receivables and payables exposed to multiple currencies (DKK, EUR, MXN, USD and ZAR) in various countries (CAD, CHF, CNY, EUR, GBP, PLN and USD) | | Dec 2019 | | 65.8 | | .1 |
| | — |
| | .3 |
| | — |
| Total fair value hedges | | | | | | .1 |
| | — |
| | .3 |
| | — |
| Derivatives not designated as hedging instruments | | | | | | | | | | | Non-deliverable hedges (EUR and USD) exposed to the CNY | | Dec 2019 | | 23.6 | | .1 |
| | — |
| | .3 |
| | — |
| Total derivatives not designated as hedging instruments | | | | | | .1 |
| | — |
| | .3 |
| | — |
| Total derivatives | | | | | | $ | 1.0 |
| | $ | .2 |
| | $ | 4.5 |
| | $ | .2 |
|
The following table sets forth the pretax (gains) losses for our hedging activities for the years presented. This schedule includes reclassifications from accumulated other comprehensive income as well as derivative settlements recorded directly to income or expense. | | | | | | | | | | | | | | | | | | Income Statement Caption | | Amount of (Gain) Loss Recorded in Income for the Year Ended December 31 | Derivatives Designated as Hedging Instruments | | 2019 | | 2018 | | 2017 | Interest rate cash flow hedges | | Interest expense | | $ | 4.4 |
| | $ | 4.3 |
| | $ | 4.2 |
| Currency cash flow hedges | | Net sales | | 2.7 |
| | (2.0 | ) | | (1.4 | ) | Currency cash flow hedges | | Cost of goods sold | | (1.6 | ) | | .4 |
| | .4 |
| Currency cash flow hedges | | Other expense (income), net | | .1 |
| | — |
| | .6 |
| Total cash flow hedges | | | | 5.6 |
| | 2.7 |
| | 3.8 |
| Fair value hedges | | Other expense (income), net | | .8 |
| | 1.2 |
| | (.2 | ) | Derivatives Not Designated as Hedging Instruments | | Other expense (income), net | | .1 |
| | (1.6 | ) | | (1.7 | ) | Total derivative instruments | | | | $ | 6.5 |
| | $ | 2.3 |
| | $ | 1.9 |
|
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