Hedging Activities and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Hedging Activities and Fair Value Measurements [Abstract]

Notional Amounts, Fair Values and Classification of Outstanding Derivatives by Risk Category and Instrument Type

The following table summarizes the notional amounts, fair values and classification of the Company’s outstanding derivatives by risk category and instrument type within the Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017.

	September 30, 2018
	Derivative Classification	Notional Amount ⁽¹⁾		Fair Value ⁽¹⁾ Other Current Assets		Fair Value ⁽¹⁾ Other Assets		Fair Value ⁽¹⁾ Accrued Liabilities		Fair Value ⁽¹⁾ Other Liabilities
Derivatives Designated as Hedging Instruments
Interest rate swap contracts	Cash Flow	$	1,025.0	$	-	$	-	$	3.4	$	14.2
Derivatives Not Designated as Hedging Instruments
Foreign currency forwards	Fair Value	$	26.5	$	-	$	-	$	0.3	$	-

	December 31, 2017
	Derivative Classification	Notional Amount ⁽¹⁾		Fair Value ⁽¹⁾ Other Current Assets		Fair Value ⁽¹⁾ Other Assets		Fair Value ⁽¹⁾ Accrued Liabilities		Fair Value ⁽¹⁾ Other Liabilities
Derivatives Designated as Hedging Instruments
Interest rate swap contracts	Cash Flow	$	1,125.0	$	-	$	-	$	16.1	$	30.6
Derivatives Not Designated as Hedging Instruments
Foreign currency forwards	Fair Value	$	94.4	$	-	$	-	$	1.2	$	-

⁽¹⁾

Notional amounts represent the gross contract amounts of the outstanding derivatives excluding the total notional amount of positions that have been effectively closed through offsetting positions. The net gains and net losses associated with positions that have been effectively closed through offsetting positions but not yet settled are included in the asset and liability derivatives fair value columns, respectively.

Gains and Losses on Derivatives Designated as Cash Flow Hedges

Gains and losses on derivatives designated as cash flow hedges included in the Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine month periods ended September 30, 2018 and 2017, are as presented in the table below. See Note 1 “Condensed Consolidated Financial Statements” for a discussion of the adoption of ASU 2017-12.

	For the Three Month Periods Ended September 30,						For the Nine Month Periods Ended September 30,
	2018			2017			2018			2017
Interest rate swap contracts
Gain (loss) recognized in AOCI on derivatives	$	1.8		$	1.4		$	15.2		$	(4.9	)
Loss reclassified from AOCI into income (effective portion)⁽¹⁾		(3.3	)		(4.1	)		(11.2	)		(13.9	)
Loss reclassified from AOCI into income (missed forecast)⁽²⁾		(0.6	)		-			(0.6	)		-

⁽¹⁾

Losses on derivatives reclassified from accumulated other comprehensive income (“AOCI”) into income (effective portion) were included in “Interest expense” in the Condensed Consolidated Statements of Operations, the same income statement line item as the earnings effect of the hedged item.

⁽²⁾

During the three month period ended September 30, 2018, the Company used excess cash to pay down $150.0 million of its Dollar Term Loan Facility. Due to this unforecasted pay down of debt, the Company paid $2.7 million in the amendment of the interest rate swap contracts to reflect the updated forecasted cash flows. The updated forecasts caused certain hedged items to be deemed probable of not occurring in the future and thus, the Company accelerated the release of AOCI related to those hedged items. Losses reclassified from AOCI into income (missed forecast) were included in “Loss on extinguishment of debt” in the Condensed Consolidated Statements of Operations.

(Losses) Gains on Derivative Instruments Not Designated as Accounting Hedges and Total Net Foreign Currency (Losses) Gains

The Company’s (losses) gains on derivative instruments not designated as accounting hedges and total net foreign currency (losses) gains for the three and nine month periods ended September 30, 2018 and 2017 were as follows.

	For the Three Month Periods Ended September 30,						For the Nine Month Periods Ended September 30,
	2018			2017			2018		2017
Foreign currency forward contracts (losses) gains	$	(0.4	)	$	(1.8	)	$	5.8	$	(6.7	)
Total foreign currency transaction gains (losses), net		0.8			(1.7	)		0.6		(6.3	)

Changes in Value of Debt and Designated Interest Rate Swaps

The Company’s gains and (losses), net of income tax, associated with changes in the value of debt and designated cross currency interest rate swaps for the three and nine month periods ended September 30, 2018 and 2017 and the net balance of such gains and (losses) included in accumulated other comprehensive (loss) income as of September 30, 2018 and 2017 were as follows.

	For the Three Month Periods Ended September 30,					For the Nine Month Periods Ended September 30,
	2018		2017			2018		2017
Gain (loss), net of income tax, recorded through other comprehensive income	$	3.5	$	(13.6	)	$	18.0	$	(43.2	)
Balance included in accumulated other comprehensive (loss) income as of September 30, 2018 and 2017, respectively						$	50.1	$	39.2

Assets and Liabilities Measured at Fair Value

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2018.

	Level 1		Level 2		Level 3		Total
Financial Assets
Trading securities held in deferred compensation plan⁽¹⁾	$	6.3	$	-	$	-	$	6.3
Total	$	6.3	$	-	$	-	$	6.3
Financial Liabilities
Foreign currency forwards⁽²⁾	$	-	$	0.3	$	-	$	0.3
Interest rate swaps⁽³⁾		-		17.6		-		17.6
Deferred compensation plan⁽¹⁾		6.3		-		-		6.3
Total	$	6.3	$	17.9	$	-	$	24.2

⁽¹⁾

Based on the quoted price of publicly traded mutual funds which are classified as trading securities and accounted for using the mark-to-market method.

⁽²⁾

Based on calculations that use readily observable market parameters as their basis, such as spot and forward rates.

⁽³⁾

Measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curves as of September 30, 2018. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparties.

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

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