Derivative Financial Instruments (Tables)

3 Months Ended

Dec. 31, 2016

Derivative [Line Items]

Schedule of Derivative Instruments [Table Text Block]

The swaps effectively fix the floating price on a specified quantity of raw materials through a specified date. At December 31, 2016, Spectrum Brands had a series of zinc and brass swap contracts outstanding through December 2017. The derivative net gains estimated to be reclassified from AOCI into earnings over the next 12 months is $1.3, net of tax. Spectrum Brands had the following commodity swap contracts outstanding as of December 31, 2016 and September 30, 2016:

	December 31, 2016			September 30, 2016
	Notional	Contract Value		Notional	Contract Value
Zinc swap contracts (tons)	5.1	$	9.8	6.7	$	12.8
Brass swap contracts (tons)	1.0	3.8		1.0	4.0

Net Investment Hedge. On September 20, 2016, Spectrum Brands, Inc., a subsidiary of Spectrum Brands, issued €425.0 aggregate principal amount of 4.00% Notes at par value, due October 1, 2026 (“4.00% Notes”). Spectrum Brands’ 4.00% Notes are denominated in Euros and have been designated as a net investment hedge of the translation of Spectrum Brands’ net investments in Euro denominated subsidiaries at the time of issuance. As a result, the translation of the Euro denominated debt is recognized in AOCI with any ineffective portion recognized as foreign currency translation gains or losses in the accompanying Condensed Consolidated Statements of Operations when the aggregate principal exceeds the net investment in its Euro denominated subsidiaries. Net gains or losses from the net investment hedge are reclassified from AOCI into earnings upon a liquidation event or deconsolidation of Euro denominated subsidiaries. As of December 31, 2016, the hedge was fully effective and no ineffective portion was recognized in earnings.

Commodity Swaps - not designated as hedges for accounting purposes. Spectrum Brands periodically enters into commodity swap contracts to economically hedge the risk from fluctuating prices for raw materials, specifically the pass-through of market prices for silver used in manufacturing purchased watch batteries. Spectrum Brands hedges a portion of the risk associated with these materials through the use of commodity swaps. The commodity swap contracts are designated as economic hedges with the unrealized gain or loss recorded in earnings and as an asset or liability at each period end. The unrecognized changes in the fair value of the commodity swap contracts are adjusted through earnings when the realized gains or losses affect earnings upon settlement of the commodity swap contracts. The commodity swap contracts effectively fix the floating price on a specified quantity of silver through a specified date. At December 31, 2016, Spectrum Brands had a series of commodity swaps outstanding through September 2017. Spectrum Brands had the following commodity swaps outstanding as of December 31, 2016 and September 30, 2016:

	December 31, 2016			September 30, 2016
	Notional	Contract Value		Notional	Contract Value
Silver (troy oz.)	20.0	$	0.4	31.0	$	0.6

Spectrum Brands’ interest rate swap derivative financial instruments at December 31, 2016 and September 30, 2016 were as follows:

	December 31, 2016			September 30, 2016
	Notional		Remaining Years	Notional		Remaining Years
Interest rate swaps - fixed	$	300.0	0.3	$	300.0	0.5

Fair Value of Outstanding Derivative Contracts in Condensed Consolidated Balance Sheets

The fair value of outstanding derivatives recorded in the accompanying Condensed Consolidated Balance Sheets were as follows:

Asset Derivatives	Classification	December 31, 2016		September 30, 2016
Derivatives designated as hedging instruments:
Foreign exchange contracts	Receivables, net	$	10.1	$	5.5
Commodity swaps	Receivables, net	3.3		2.9
Foreign exchange contracts	Other assets	0.1		0.1
Total asset derivatives designated as hedging instruments		13.5		8.5
Derivatives not designated as hedging instruments:
Call option receivable from FGL	Funds withheld receivables	12.2		11.3
Call options	Other assets	8.3		5.9
Foreign exchange contracts	Receivables, net	0.1		0.2
Total asset derivatives		$	34.1	$	25.9

Liability Derivatives	Classification	December 31, 2016		September 30, 2016
Derivatives designated as hedging instruments:
Interest rate swaps	Accounts payable and other current liabilities	$	0.3	$	0.7
Interest rate swaps	Other liabilities	0.4		0.4
Commodity swaps	Accounts payable and other current liabilities	0.2		0.1
Foreign exchange contracts	Accounts payable and other current liabilities	0.1		1.7
Foreign exchange contracts	Other liabilities	0.1		0.1
Total liability derivatives designated as hedging instruments		1.1		3.0
Derivatives not designated as hedging instruments:
Embedded derivatives in Front Street's assumed FIA business	Insurance reserves	121.2		131.2
Foreign exchange contracts	Accounts payable and other current liabilities	0.3		0.2
Total liability derivatives		$	122.6	$	134.4

Summary of Gain (Loss) Recognized in Income on Derivatives

During the three months ended December 31, 2016 and 2015, the Company recognized the following gains and losses on its derivatives:

		Three months ended December 31,
Classification	Derivatives Not Designated as Hedging Instruments	2016			2015
Revenues:
Net investment losses	Call options	$	3.1		$	1.9
Operating costs and expenses:
Cost of consumer products and other goods sold	Commodity swaps	$	0.1		$	—
Benefits and other changes in policy reserves	Embedded derivatives in Front Street's assumed FIA business	(10.0		)	(2.4		)
Other income (expense), net	Foreign exchange contracts	0.7			(2.1		)

Impact of effective and ineffective portions of cash flow hedges and gain (loss) realized in statement of operations [Table Text Block]

The following tables summarize the impact of the effective portion of designated hedges and the gain recognized in the accompanying Condensed Consolidated Statements of Operations for the three months ended December 31, 2016 and 2015:

Three months ended December 31, 2016	Classification	Effective portion
		Gain in AOCI		Gain (Loss) reclassified to Earnings
Interest rate swaps	Interest expense	$	0.1	$	(0.3	)
Commodity swaps	Cost of consumer products and other goods sold	0.1		0.8
Net investment hedge	Other income (expense), net	32.5		—
Foreign exchange contracts	Net consumer and other product sales	0.2		—
Foreign exchange contracts	Cost of consumer products and other goods sold	10.3		4.3
		$	43.2	$	4.8

Three months ended December 31, 2015	Classification	Effective portion
		Gain (Loss) in AOCI			Gain (Loss) reclassified to Earnings
Interest rate swaps	Interest expense	$	0.3		$	(0.5	)
Commodity swaps	Cost of consumer products and other goods sold	(1.0		)	(1.4		)
Foreign exchange contracts	Net consumer and other product sales	(0.1		)	—
Foreign exchange contracts	Cost of consumer products and other goods sold	5.4			2.1
		$	4.6		$	0.2