Derivative Instruments

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company uses derivative instruments to partially offset its business exposure to foreign currency risk on net investments in certain foreign subsidiaries. The Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations or significant economic cost of hedging particular exposures. To protect the net investment in a foreign operation from fluctuations in foreign currency exchange rates, the Company may enter into foreign currency forward contracts to offset a portion of the changes in the carrying amounts of these investments due to fluctuations in foreign currency exchange rates.

During the nine months ended September 30, 2019, the Company entered into four forward contracts with an aggregate notional amount of €40.0 million to hedge foreign currency exposure on net investments in certain of its European subsidiaries whose functional currency is the Euro. These forward contracts are designated as hedging instruments and recognized at fair value as assets or liabilities in the accompanying unaudited Consolidated Balance Sheets. Each contract has a notional amount of €10.0 million and matures annually starting on June 15, 2020 through June 13, 2023. The contracts will settle in US Dollars upon maturity.

The forward contracts are designated and qualify as net investment hedges. The Company made an accounting policy election to assess effectiveness for its net investment hedges based on the spot rate method. With the spot rate method, changes in hedge fair values attributable to the differences between the forward rate and the spot rate at inception are excluded from the effectiveness assessment. The initial value of such amounts is measured at contract inception and recognized in earnings within “Other income, net” in the Company’s accompanying unaudited Consolidated Statements of Operations, consistent with the Company's accounting policy election to amortize it on a straight-line basis over the hedging instruments' contractual term. The change in the fair value of the net investment hedges included in their effectiveness assessment is recognized within "Cumulative Translation Adjustments" of Other Comprehensive Loss until the hedged net investments in foreign operations are sold or substantially liquidated.

The following table summarizes the fair value of the Company’s derivative instruments designated as net investment hedges as of September 30, 2019:



(In millions)	September 30, 2019
Derivative asset⁽¹⁾:
Foreign exchange forward contracts	$	2.0

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(1)	The fair value of derivative instruments is measured based on expected future cash flows discounted at market interest rates using observable market inputs and classified as Level 2 within the fair value hierarchy. Fair value of derivative liabilities is recorded within "Other Current Assets" and "Other Assets" in the accompanying unaudited Consolidated Balance Sheets.

The following table summarizes the amounts recorded in the Company's accompanying unaudited Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) related to forward contracts designated as net investment hedges for the three and nine months ended September 30, 2019:



(In millions)	Three months ended September 30, 2019				Nine months ended September 30, 2019
	"Other Income, net"		Cumulative Translation Adjustments⁽¹⁾		"Other Income, net"		Cumulative Translation Adjustments⁽¹⁾
Gains on foreign exchange forward contracts	$	0.2	$	1.5	$	0.3	$	1.3

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(1)

The amounts are presented net of tax liability for the three and nine months ended September 30, 2019 of $0.5 million and $0.4 million, respectively.