Derivative Financial Instruments

12 Months Ended

Dec. 31, 2011

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

12. Derivative Financial Instruments

The Company is exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. The Company enters into financial instruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financial instruments are major financial institutions. The Company continually monitors its foreign currency exposures in order to maximize the overall effectiveness of its foreign currency hedge positions. Principal currencies hedged include the U.S. dollar, Euro, Australian dollar, Canadian dollar and Pound sterling. The Company is subject to credit risk, which relates to the ability of counterparties to meet their contractual payment obligations or the potential non-performance by counterparties to financial instrument contracts. Management continues to monitor the status of the Company's counterparties and will take action, as appropriate, to further manage its counterparty credit risk. There are no credit contingency features in our derivative financial instruments.

On the date in which the Company enters into a derivative, the derivative is designated as a hedge of the identified exposure. The Company measures the effectiveness of its hedging relationships both at hedge inception and on an ongoing basis.

Forward Currency Contracts

The Company enters into forward foreign currency contracts to reduce the effect of fluctuating foreign currencies, primarily on foreign denominated inventory purchases and intercompany loans. The majority of the Company's exposure to local currency movements is in Europe, Australia, Canada, Mexico and Japan.

Forward currency contracts used to hedge foreign denominated inventory purchases are designated as a cash flow hedge. Unrealized gains and losses on these contracts for inventory purchases are deferred in other comprehensive income until the contracts are settled and the underlying hedged transactions are recognized, at which time the deferred gains or losses will be reported in the "Cost of products sold" line in the consolidated statements of operations. As of December 31, 2011 and December 31, 2010, the Company had cash flow designated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $71.9 million and $92.9 million, respectively.

Forward currency contracts used to hedge foreign denominated intercompany loans are not designated as hedging instruments. Gains and losses on these derivative instruments are recognized within other expense, net in the consolidated statements of operations and are largely offset by the changes in the fair value of the hedged item. The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions, and do not extend beyond 2012. As of December 31, 2011 and 2010, the Company had undesignated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $75.6 million and $92.7 million, respectively.

The following table summarizes the fair value of the Company's derivative financial instruments as of December 31, 2011 and 2010, respectively.

	Fair Value of Derivative Instruments
	Derivative Assets					Derivative Liabilities
(in millions of dollars)	Balance Sheet Location	Dec. 31, 2011		Dec. 31, 2010		Balance Sheet Location	Dec. 31, 2011		Dec. 31, 2010
Derivatives designated as hedging instruments:
Foreign exchange contracts	Other current assets	$	3.0	$	0.7	Other current liabilities	$	0.2	$	2.4
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current assets		0.8		1.4	Other current liabilities		1.2		0.8
Total derivatives		$	3.8	$	2.1		$	1.4	$	3.2

The following table summarizes the pre-tax effect of the Company's derivative financial instruments on the Consolidated Statements of Operations for the years ended December 31, 2011 and 2010, respectively.

	The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Consolidated Statements of Operations for the Years Ended December 31, 2011 and 2010
	Amount of (Gain) Loss Recognized in OCI (Effective Portion)				Location of (Gain) Loss Reclassified from OCI to Income		Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion)				Location of (Gain) Loss Recognized in Income		Amount of (Gain) Loss Recognized in Income (Ineffective Portion)
(in millions of dollars)	2011		2010				2011		2010				2011		2010
Cash flow hedges:
Foreign exchange contracts		0.3	$	3.1		Cost of products sold	$	4.4	$	0.8		Cost of products sold	$	—	$	—
Total	$	0.3	$	3.1			$	4.4	$	0.8			$	—	$	—

	The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations
	Location  of (Gain) Loss Recognized in Income on Derivatives		Amount of (Gain) Loss Recognized in Income Year Ended Dec. 31,
(in millions of dollars)			2011		2010
Foreign exchange contracts		Other (income) expense	$	0.9	$	(1.8	)