FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table presents the fair value for those assets and (liabilities) measured on a recurring basis as of January 31, 2017 and October 31, 2016 (Dollars in millions):



	January 31, 2017
	Fair Value Measurement
	Level 1		Level 2			Level 3		Total			Balance Sheet Location
Interest rate derivatives	$	—	$	8.6		$	—	$	8.6		Other long-term assets
Foreign exchange hedges	—		0.6			—		0.6			Prepaid expenses and other current assets
Foreign exchange hedges	—		(2.2		)	—		(2.2		)	Other current liabilities
Insurance annuity	—		—			19.6		19.6			Other long-term assets
Total*	$	—	$	7.0		$	19.6	$	26.6



	October 31, 2016
	Fair Value Measurement
	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	—		(0.3		)	—		(0.3		)	Other current liabilities
Insurance annuity	—		—			20.1		20.1			Other long-term assets
Total*	$	—	$	—		$	20.1	$	20.1

*The carrying amounts of cash and cash equivalents, trade accounts receivable, accounts payable, current liabilities and short-term borrowings as of January 31, 2017 and October 31, 2016 approximate their fair values due to the short-term nature of these items and are not included in this table.

Interest Rate Derivatives

During the first quarter of 2017, the Company entered into a forward interest rate swap with a notional amount of $300 million. As of February 1, 2017, the Company began to receive variable rate interest payments based upon one month U.S. dollar LIBOR and was obligated to pay interest at a fixed spread, depending on the leverage ratio, over the borrowing cost as defined in the 2017 Credit Agreement. On February 1, 2017, this effectively converted the borrowing rate on $300 million of debt under the 2017 Credit Agreement from a variable rate to a fixed rate of 2.944%. This derivative is designated as a cash flow hedge for accounting purposes. Accordingly, any effective portion of the gain or loss on this derivative instrument is 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 is recognized into earnings. The assumptions 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 January 31, 2017, the Company had outstanding foreign currency forward contracts in the notional amount of $158.0 million ($78.9 million as of October 31, 2016). Adjustments to fair value are recognized in earnings, offsetting the impact of the hedged profits. 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. Realized losses recorded in other expense, net under fair value contracts were $1.3 million and $0.5 million for the three months ended January 31, 2017 and 2016, respectively.

Other Financial Instruments

The fair values of the Company’s 2017 Credit Agreement and the 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 of the Company’s senior notes (Dollars in millions):



	January 31, 2017		October 31, 2016
Senior Notes due 2017
Estimated fair value	$	300.2	$	302.4
Senior Notes due 2019
Estimated fair value	277.6		280.1
Senior Notes due 2021
Estimated fair value	261.5		264.9

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 three months ended January 31, 2017 and 2016, respectively.



	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value of Impairment		Valuation Technique	Unobservable Input	Range of Input Values
	(in millions)
January 31, 2017
Impairment of Net Assets Held for Sale	$	1.5	Broker Quote/ Indicative Bids	Indicative Bids	N/A
Impairment of Long Lived Assets	$	0.4	Sales Value	Sales Value	N/A
January 31, 2016
Impairment of Long Lived Assets - Land & Building	$	34.1	Broker Quote/ Indicative Bids	Indicative Bids	N/A
Impairment of Long Lived Assets - Machinery & Equipment	$	5.0	Sales Value	Sales Value	N/A

Long-Lived Assets

The Company recognized asset impairment charges of $1.9 million during the three months ended January 31, 2017 and $39.1 million for the three months ended January 31, 2016. As a result of the Company measuring long-lived assets at fair value on a non-recurring basis, during the three months ended January 31, 2017, the Company recorded impairment charges related to properties, plants and equipment, net, of $0.3 million and $0.1 million in the Flexible Products & Services segment and the Rigid Industrial Packaging & Services segment, respectively.

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

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. During the three month period ended January 31, 2017, one asset group was reclassified to assets and liabilities held for sale, resulting in a $1.5 million impairment to net realizable value.

Goodwill and Other Intangible Assets

On an annual basis or whenever events or circumstances indicate impairment may have occurred, the Company performs impairment tests for goodwill and long lived intangible assets as defined under ASC 350, “Intangibles-Goodwill and Other.” The Company concluded that no impairment existed as of January 31, 2017 and October 31, 2016.