Derivative Instruments

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

In the normal course of business, the Company is exposed to risks relating to changes in foreign currency exchange rates, interest rates and commodity prices. Derivative financial instruments, such as foreign currency exchange rate instruments and interest rate swaps, are used to manage changes in market conditions related to foreign currency exchange rate and interest rate volatility. All derivatives are recognized on the Condensed Consolidated Balance Sheets at fair value at the end of each period. The counterparties to the Company’s derivative agreements are major international financial institutions. The Company continually monitors its positions and the credit ratings of its counterparties and does not anticipate nonperformance by the counterparties.

Foreign Currency

The Company conducts a significant portion of its business in currencies other than the U.S. dollar, the currency in which the unaudited interim Condensed Consolidated Financial Statements are reported, and as a result, the Company’s operating results are affected by foreign currency exchange rate volatility relative to the U.S. dollar.

As of September 30, 2015, the aggregate U.S. dollar notional amount of foreign currency forward contracts, none of which were designated as hedges, totaled $910 million, all with settlement dates within one year. The majority of forward contracts are in British pounds (£533 million) and US dollars ($99.8 million), with lesser amounts in Chinese yuans, Euros, New Zealand dollars and Australian dollars. The market value of forward contracts are determined using pricing models based upon observable market inputs including both forward and spot prices for the underlying currencies. The net fair value of the foreign currency forward contracts is recorded as an unrealized gain (loss) under "Other (expense) income, net" in the accompanying Condensed Consolidated Statement of Operations.

In connection with the proposed Alent Acquisition, during July 2015, the Company entered into no-cost, deal contingent forward purchases of £1.06 billion ($1.64 billion, based on the GBP/USD exchange rate of 1.5487 on July 13, 2015). The price for 50% of the forward purchases is set; however, it is dependent upon the timing of the closing of the proposed Alent Acquisition. The price for the remaining 50% allows for the Company to benefit from a weakening of the GBP relative to the USD while being protected against price movements above a maximum average of GBP/USD exchange rate of 1.6244.

Interest Rates

In August 2015, the Company entered into a series of pay fixed, receiving floating interest rate swaps with respect to a portion of its indebtedness. The swaps effectively fix the floating base rate portion of the interest payments on approximately $1.16 billion of the Company's USD denominated debt and €285 million of its Euro denominated debt at 1.96% and 1.20%, respectively, from September 2015 through June 2020.

Changes in the fair value of a derivative that is designated as, and meets all the required criteria for, a cash flow hedge are recorded in accumulated other comprehensive income (loss) and reclassified into earnings as the underlying hedged item affects earnings. Amounts reclassified into earnings related to the interest rate swaps are included in interest expense.

The following table summarizes the fair value of derivative instruments reported in the Condensed Consolidated Balance Sheets:

(amounts in millions)		September 30, 2015			December 31, 2014
Derivatives designated as hedging instruments	Liabilities Balance Sheet Location
Interest Rate Swaps	Other current liabilities	$	18.1		$	—
Derivatives not designated as hedging instruments:	Assets Balance Sheet Location
Foreign exchange contracts	Prepaid expenses & other current assets	0.5			—
	Other Assets	0.7			—
	Liabilities Balance Sheet Location
Foreign exchange contracts	Other current liabilities	48.6			0.1
Total derivative contracts - Asset (Liability)		$	(65.5	)	$	(0.1	)

For the three and nine months ended September 30, 2015, there were $18.1 million unrealized losses recorded in Other Comprehensive Income related to foreign currency hedges. For the three months ended September 30, 2014, there were no unrealized gains (losses) recorded in "Other Comprehensive Income" related to foreign currency hedges. For the nine months ended September 30, 2014, unrealized losses totaled $0.2 million.

For the three and nine months ended September 30, 2015, the Company recorded $47.3 million and $49.9 million, respectively, of net unrealized losses in "Loss on derivative contracts" related to hedged foreign exchange contracts. For the three and nine months ended September 30, 2014 , the Company recorded $2.6 million and $2.2 million respectively, of net unrealized losses in "Loss on derivative contracts" related to hedged foreign exchange contracts.