From time to time, the Company enters into derivative transactions to hedge its exposures to interest rate, foreign currency rate and commodity price fluctuations. The Company does not enter into derivative transactions for trading purposes.

The Company manages its fixed and floating rate debt mix using interest rate swaps. The Company may use fixed and floating rate swaps to alter its exposure to the impact of changing interest rates on its consolidated results of operations and future cash outflows for interest. Floating rate swaps would be used, depending on market conditions, to convert the fixed rates of long-term debt into short-term variable rates. Fixed rate swaps would be used to reduce the Company’s risk of the possibility of increased interest costs. Interest rate swap contracts are therefore used by the Company to separate interest rate risk management from the debt funding decision. The cash paid and received from the settlement of interest rate swaps is included in interest expense.

At September 30, 2019, the Company had approximately $377 million notional amount of interest rate swaps that exchange a fixed rate of interest for variable rate (LIBOR) of interest plus a weighted average spread. These floating rate swaps are designated as fair value hedges against $277 million of principal on the 4.7% senior notes due 2020 and $100 million of principal on the 4.0% senior notes due 2024 (the "2024 Notes") for the remaining life of these notes. The effective portion of the fair value gains or losses on these swaps is offset by fair value adjustments in the underlying debt.

During the third quarter of 2019, the Company terminated approximately $150 million notional amount of these floating rate swaps and received consideration of $5.6 million, which is included in net cash provided by operating activities in the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2019. These floating rate swaps that were

designated as fair value hedges, were terminated in connection with the extinguishment of a portion of the principal balance of the 2024 Notes pursuant to the Tender Offers (see Footnote 9). The termination of these floating rate swaps resulted in a total gain of $5.7 million, which is included in loss on extinguishment of debt for the three and nine months ended September 30, 2019 in the Condensed Consolidated Statements of Operations.

The Company uses cross-currency swaps to hedge foreign currency risk on certain intercompany financing arrangements with foreign subsidiaries. During 2018, all the Company’s cross-currency interest rate swaps matured. As such, there were no cross-currency swaps outstanding at September 30, 2019 and December 31, 2018. The cross-currency interest rate swaps were intended to eliminate uncertainty in cash flows in U.S. Dollars and British Pounds in connection with the intercompany financing arrangements.

The Company uses forward foreign currency contracts to mitigate the foreign currency exchange rate exposure on the cash flows related to forecasted inventory purchases and sales and have maturity dates through September 2020. The derivatives used to hedge these forecasted transactions that meet the criteria for hedge accounting are accounted for as cash flow hedges. The effective portion of the gains or losses on these derivatives is deferred as a component of AOCL and is recognized in earnings at the same time that the hedged item affects earnings and is included in the same caption in the statements of operations as the underlying hedged item. At September 30, 2019, the Company had approximately $298 million notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales.

The Company also uses foreign currency contracts, primarily forward foreign currency contracts, to mitigate the foreign currency exposure of certain other foreign currency transactions. At September 30, 2019, the Company had approximately $779 million notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through October 2020. Fair market value gains or losses are included in the results of operations and are classified in other expense (income), net.

From time to time the Company may enter into commodity-based derivatives in order to mitigate the risk that the rising price of these commodities could have on the cost of certain of the Company’s raw materials. These commodity-based derivatives provide the Company with cost certainty. At September 30, 2019, the Company had approximately $3.7 million notional amount outstanding of commodity-based derivatives that are designated as effective hedges for accounting purposes and have maturity dates through January 2020. Fair market value gains or losses are included in the results of operations and are classified in cost of products sold.



	September 30, 2019				December 31, 2018
	Fair Value of Derivatives				Fair Value of Derivatives
	Asset (a)		Liability (a)		Asset (a)		Liability (a)
Derivatives designated as effective hedges:
Cash flow hedges:
Foreign currency contracts	$	6.2	$	1.2	$	13.3	$	0.7
Commodity contracts	—		0.1		—		—
Fair value hedges:
Interest rate swaps	3.2		1.3		—		11.5
Derivatives not designated as effective hedges:
Foreign currency contracts	11.9		14.0		12.9		4.2
Commodity contracts	—		—		—		0.9
Total	$	21.3	$	16.6	$	26.2	$	17.3

(a) Consolidated balance sheet location:
Asset: Prepaid expenses and other, and other noncurrent assets
Liability: Other accrued liabilities, and current and noncurrent liabilities

The following tables present gain and loss activity (on a pretax basis) for the three and nine months ended September 30, 2019 and 2018 related to derivative financial instruments designated or previously designated, as effective hedges (in millions):



		Three Months Ended September 30, 2019					Three Months Ended September 30, 2018
		Gain/(Loss)					Gain/(Loss)
	Location of gain/(loss) recognized in income	Recognized in OCI (a) (effective portion)		Reclassified from AOCL to Income			Recognized in OCI (a) (effective portion)		Reclassified from AOCL to Income
Interest rate swaps	Interest expense, net	$	—	$	(3.4	)	$	—	$	(1.9	)
Foreign currency contracts	Net sales and cost of products sold	5.6		3.4			1.7		(3.0		)
Commodity contracts	Cost of products sold	—		—			—		—
Cross-currency swaps	Other expense (income), net	—		—			—		—
Total		$	5.6	$	—		$	1.7	$	(4.9	)



		Nine Months Ended September 30, 2019						Nine Months Ended September 30, 2018
		Gain/(Loss)						Gain/(Loss)
	Location of gain/(loss) recognized in income	Recognized in OCI (a) (effective portion)			Reclassified from AOCL to Income			Recognized in OCI (a) (effective portion)			Reclassified from AOCL to Income
Interest rate swaps	Interest expense, net	$	—		$	(6.5	)	$	—		$	(5.7	)
Foreign currency contracts	Net sales and cost of products sold	1.1			11.7			11.7			(15.5		)
Commodity contracts	Cost of products sold	(0.1		)	—			—			—
Cross-currency swaps	Other expense (income), net	—			—			(1.7		)	(3.0		)
Total		$	1.0		$	5.2		$	10.0		$	(24.2	)

During the three and nine months ended September 30, 2019, the Company recognized income (expense) of $(2.3) million and $(12.0) million, respectively, in other expense (income), net, related to derivatives that are not designated as hedging instruments.

During the three and nine months ended September 30, 2018, the Company recognized income (expense) of $(8.1) million and $(11.1) million, respectively, in other expense (income), net, related to derivatives that are not designated as hedging instruments. Gains and losses on these derivatives are mostly offset by foreign currency movement in the underlying exposure.