HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses cross-currency swap derivative contracts to partially hedge its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and the Swiss franc. The cross-currency swap derivative contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. In January 2019, the Company entered into cross-currency swap derivative contracts on approximately $1.9 billion which corresponds with certain of its U.S. dollar-denominated bonds. These contracts effectively convert the Company’s U.S. dollar-denominated bonds to obligations denominated in Danish kroner, Japanese yen, euro and Swiss franc, and will partially offset the impact of changes in currency rates on foreign currency denominated net investments in future periods. The changes in the fair value of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss) in the Company’s Consolidated Condensed Statements of Stockholders’ Equity. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense in the Company’s Consolidated Condensed Statements of Earnings consistent with the interest expense attributable to the underlying debt. These instruments will mature on dates ranging from June 2019 to September 2028.

The Company incurred foreign currency denominated long-term debt as partial hedges of its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro, Japanese yen, Swiss franc, British pound and Canadian dollar. These foreign currency denominated long-term debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other comprehensive income (loss) in stockholders’ equity in the accompanying Consolidated Condensed Balance Sheets, offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss). Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. These instruments will mature on dates ranging from June 2019 to May 2032.

The following table summarizes the notional values and pretax impact of changes in the fair values of instruments designated as net investment hedges ($ in millions):



	Three-Month Period Ended March 29, 2019
	Notional Amount		Gain (Loss) Recognized in OCI
Foreign currency contracts	$	1,875.0	$	14.8
Foreign currency denominated debt	7,518.3		137.8
Total	$	9,393.3	$	152.6

The Company did not reclassify any deferred gains or losses related to net investment hedges from accumulated other comprehensive income (loss) to earnings during the three-month period ended March 29, 2019. In addition, the Company did not have any ineffectiveness related to net investment hedges during the three-month period ended March 29, 2019. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified in the line item “all other investing activities” in the accompanying Consolidated Condensed Statement of Cash Flows.

The Company’s derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified as of March 29, 2019 in the Company’s Consolidated Condensed Balance Sheet as follows ($ in millions):



	March 29, 2019
Derivative assets:
Prepaid expenses and other current assets	$	17.1

Derivative liabilities:
Accrued expenses and other liabilities	2.3

Nonderivative hedging instruments:
Long-term debt	7,518.3

Amounts related to the Company’s derivatives expected to be reclassified from accumulated other comprehensive income (loss) to net earnings during the next 12 months are not significant.