FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table presents the fair value of those assets and (liabilities) measured on a recurring basis as of October 31, 2016 and 2015 (Dollars in millions):



	October 31, 2016										Balance sheet Location
	Level 1		Level 2			Level 3		Total
Foreign exchange hedges	$	—	$	0.3		$	—	$	0.3		Prepaid expenses and other current assets
Foreign exchange hedges	—		(0.3		)	—		(0.3		)	Other current liabilities
Insurance Annuity	—		—			20.1		20.1			Other long-term assets
Total*	$	—	$	—		$	20.1	$	20.1

	October 31, 2015
	Level 1		Level 2			Level 3		Total			Balance sheet Location
Foreign exchange hedges	—		0.3			—		0.3			Prepaid expenses and other current assets
Foreign exchange hedges	—		(0.2		)			(0.2		)	Other current liabilities
Insurance Annuity	—		—			20.1		20.1			Other long-term assets
Total*	$	—	$	0.1		$	20.1	$	20.2

* The carrying amounts of cash and cash equivalents, trade accounts receivable, notes receivable, accounts payable, current liabilities and short-term borrowings as of October 31, 2016 and 2015 approximate their fair values because of the short-term nature of these items and are not included in this table.

Interest Rate Derivatives

As of October 31, 2016 and October 31, 2015 the Company had no interest rate derivatives.

Through December 2014, the Company had two interest rate derivatives (floating to fixed swap agreements designated as cash flow hedges) with a total notional amount of $150.0 million. Under these swap agreements, the Company received interest based upon a variable interest rate from the counterparties and paid interest based upon a fixed interest rate. The assumptions that were used in measuring fair value of the interest rate derivatives were considered level 2 inputs, which were based on interest from the counterparties based upon LIBOR and interest paid based upon a designated fixed rate over the life of the swap agreements. These derivative instruments were designated and qualified as cash flow hedges. Accordingly, the effective portion of the gain or loss on these derivative instruments was reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affected earnings. The ineffective portion of the gain or loss on the derivative instrument was recognized in earnings immediately.

Losses reclassified to earnings under these contracts were $0.2 million and $0.9 million for the twelve months ended October 31, 2015, and 2014, respectively. These losses were recorded within the consolidated statements of income as interest expense, net.

Subsequent to October 31, 2016, the Company entered into a forward interest rate swap with a notional amount of $300 million. Beginning as of February 1, 2017, the Company has agreed to receive variable rate interest based upon one month U.S. dollar LIBOR and pay a fixed spread, depending on the leverage ratio, over the borrowing cost as defined in the 2017 Credit Agreement. On February 1, 2017, this will effectively convert the borrowing rate on $300 million of debt under the 2017 Credit Agreement from a variable rate to a rate of 2.944%. This derivative will be designated as a cash flow hedge for accounting purposes. Accordingly, any effective portion of the gain or loss on this derivative instrument will be reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. Any ineffective portion of the gain or loss on the derivative instrument will be recognized into earnings. The assumptions that will be used in measuring fair value of the interest rate derivative are considered level 2 inputs, which are based upon LIBOR and interest paid based upon a designated fixed rate over the life of the swap agreements.

Foreign Exchange Hedges

The Company conducts business in various international currencies and is subject to risks associated with changing foreign exchange rates. The Company’s objective is to reduce volatility associated with foreign exchange rate changes. Accordingly, the Company enters into various contracts that change in value as foreign exchange rates change to protect the value of certain existing foreign currency assets and liabilities, commitments and anticipated foreign currency cash flows.

As of October 31, 2016, the Company had outstanding foreign currency forward contracts in the notional amount of $78.9 million ($129.9 million as of October 31, 2015). Adjustments to fair value are recognized in earnings, offsetting the impact of the hedged item. The assumptions used in measuring fair value of foreign exchange hedges are considered level 2 inputs, which were based on observable market pricing for similar instruments, principally foreign exchange futures contracts. Losses recorded under fair value contracts were $2.7 million, $6.0 million and $6.2 million for the years ended October 31, 2016, 2015 and 2014, respectively.

Other Financial Instruments

The fair values of the Company’s Prior Credit Agreement and the Amended Receivables Facility do not materially differ from carrying value as the Company’s cost of borrowing is variable and approximates current borrowing rates. The fair values of the Company’s long-term obligations are estimated based on either the quoted market prices for the same or similar issues or the current interest rates offered for the debt of the same remaining maturities, which are considered level 2 inputs in accordance with ASC Topic 820, “Fair Value Measurements and Disclosures.”

The following table presents the estimated fair values for the Company’s Senior Notes and Assets held by special purpose entities (Dollars in millions):



	October 31, 2016		October 31, 2015
Senior Notes due 2017 Estimated fair value	$	302.4	$	314.8
Senior Notes due 2019 Estimated fair value	280.1		280.6
Senior Notes due 2021 Estimated fair value	264.9		258.7
Assets held by special purpose entities Estimated fair value	54.3		54.4

Pension Plan Assets

On an annual basis we compare the asset holdings of our pension plan to targets established by the Company. The pension plan assets are categorized as equity securities, debt securities, fixed income securities, insurance annuities or other assets, which are considered level 1, level 2 and level 3 fair value measurements. The typical asset holdings include:


•	Common Stock: Valued based on quoted prices and are primarily exchange-traded.


•	Mutual funds: Valued at the Net Asset Value “NAV” available daily in an observable market.


•	Common collective trusts: Unit value calculated based on the observable NAV of the underlying investment.


•	Pooled separate accounts: Unit value calculated based on the observable NAV of the underlying investment.


•	Government and corporate debt securities: Valued based on readily available inputs such as yield or price of bonds of comparable quality, coupon, maturity and type.


•	Insurance annuity: Value is derived based on the value of the corresponding liability.

Non-Recurring Fair Value Measurements

The following table presents quantitative information about the significant unobservable inputs used to determine the fair value of the impairment of long-lived assets held and used and net assets held for sale for the twelve months ended October 31, 2016 and October 31, 2015 (Dollars in millions):



	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value of Impairment		Valuation Technique	Unobservable Input	Range of Input Values
October 31, 2016
Impairment of Net Assets Held for Sale	$	37.6	Broker Quote / Indicative Bids	Indicative Bids	N/A
Impairment of Long Lived Assets	13.8		Sales Value	Sales Value	N/A
Total	$	51.4
October 31, 2015
Impairment of Long-lived assets- Land & Building	$	28.1	Broker Quote / Indicative Bids	Indicative Bids	N/A
Impairment of Long-lived assets- Machinery & Equipment	17.8		Sales Value	Sales Value	N/A
Total	$	45.9

Long-Lived Assets

During the year ended October 31, 2016, the Company wrote down long-lived assets with a carrying value of $19.2 million to a fair value of $5.4 million, resulting in recognized asset impairment charges of $13.8 million. These charges include $8.6 million related to properties, plants and equipment, net, in the Rigid Industrial Packaging & Services segment, $3.7 million of properties, plants and equipment, net, in the Flexible Products & Services segment, and $1.5 million related to a cost method investment in the Paper Packaging & Services segment.

During the year ended October 31, 2015, the Company wrote down long-lived assets with a carrying value of $60.7 million to a fair value of $14.8 million, resulting in recognized asset impairment charges of $45.9 million. These charges include $15.0 million of impairment charges related to Venezuelan properties, plants, and equipment, net, $11.4 million of impairment charges related to assets recognized at fair value in the Company's reconditioning business, $1.5 million of IT software assets that were identified as obsolete, $0.5 million other-than-temporary impairment of equity method investment within the Flexible Products & Services segment, $10.9 million of impairment charges related to plant closures within the Rigid Industrial Packaging & Services and Flexible Products & Services segments, and $6.6 million of various machinery and equipment determined to be obsolete.

During the year ended October 31, 2014, the Company wrote down long-lived assets with a carrying value of $58.0 million to a fair value of $22.5 million, resulting in recognized asset impairment charges of properties, plants and equipment of $35.5 million, consisting of: $11.5 million for assets in the Rigid Industrial Packaging & Services segment related to the third quarter 2014 impairment of assets to be sold for a loss in the fourth quarter of 2014, underutilized and damaged equipment and unutilized facilities in Europe; and $24.0 million for assets in Flexible Products & Services segment related to underutilized equipment and the shutdown of the fabric hub in the Kingdom of Saudi Arabia. The impairment charges in the Flexible Products & Services segment included $15.7 million related to assets valued on the basis of their highest and best use.

The assumptions used in measuring fair value of long-lived assets are considered level 3 inputs, which include bids received from third parties, recent purchase offers, market comparable information and discounted cash flows based on assumptions that market participants would use.

Assets and Liabilities Held for Sale

During the year ended October 31, 2016, the Company wrote down assets and liabilities held for sale with a carrying value of $70.6 million to a fair value of $33.0 million, resulting in recognized asset impairment charges of $37.6 million. During the year ended October 31, 2016, three asset groups were reclassified to assets and liabilities held for sale, resulting in a $23.6 million impairment to net realizable value. Included in that asset impairment, was $9.1 million of goodwill allocated to the business classified as held for sale. One asset group classified as held for sale as of October 31, 2015, was remeasured to net realizable value, resulting in an impairment of $14.0 million. Included in that asset impairment was $11.9 million of goodwill allocated to the business classified as held for sale. During the year ended October 31, 2015, two asset groups classified as held for sale at October 31, 2014 were reclassified to held and used, resulting in a $3.0 million impairment to net realizable value. During the year ended October 31, 2014, the Company recorded no additional impairment charges related to assets which were previously classified as held for sale. The assumptions used in measuring fair value of assets and liabilities held for sale are considered level 3 inputs, which include recent purchase offers, market comparables and/or data obtained from commercial real estate brokers.

Goodwill and Indefinite-Lived Intangibles

On an annual basis or when events or circumstances indicate impairment may have occurred, the Company performs impairment tests for goodwill and intangibles as defined under ASC 350, “Intangibles-Goodwill and Other.” As of October 31, 2014, the Company concluded that the carrying amount of the Flexible Products & Services reporting unit exceeded the fair value of the Flexible Products & Services reporting unit and the goodwill of $50.3 million on the Flexible Products & Services reporting unit as of October 31, 2014 was fully impaired. See Note 6 for additional information. The Company concluded that no impairment existed as of October 31, 2016 and 2015.