DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company addresses its exposure to market risks, principally the market risk associated with changes in interest rates and currency exchange rates, through a controlled program of risk management that includes, from time to time, the use of derivative financial instruments. Although the Company’s zero-coupon subordinated notes contain features that are considered to be embedded derivative instruments (see Embedded Derivative section below), the Company does not hold or issue derivative financial instruments for trading purposes. The Company does not believe that its exposure to market risk is material to the Company’s financial position or results of operations.

Interest Rate Swap

During the third quarter of 2013, the Company entered into two fixed-to-variable interest rate swap agreements for the 4.625% Senior Notes due 2020 with an aggregate notional amount of $600.0 and variable interest rates based on one-month LIBOR plus 2.298% to hedge against changes in the fair value of a portion of the Company's long-term debt. These derivative financial instruments are accounted for as fair value hedges of the Senior Notes due 2020. These interest rate swaps are included in other long-term assets or liabilities, as applicable, and added to the value of the Senior Notes. As the specific terms and notional amounts of the derivative financial instruments match those of the fixed-rate debt being hedged, the derivative instruments are assumed to be perfectly effective hedges and accordingly, there is no impact to the Company's consolidated statements of operations. Cash flows from the interest rate swaps are including in operating activities.



	Carrying amount of hedged liabilities as of December 31,				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities as of December 31,
	2018		2017		2018			2017
Balance Sheet Line Item in which Hedged Items are Included
Long-term debt, less current portion	$	597.0	$	604.1	$	(3.1	)	$	4.1

Embedded Derivatives Related to the Zero-Coupon Subordinated Notes

The Company’s zero-coupon subordinated notes contain the following two features that are considered to be embedded derivative instruments under authoritative guidance in connection with accounting for derivative instruments and hedging activities:


1)	The Company will pay contingent cash interest on the zero-coupon subordinated notes after September 11, 2006, if the average market price of the notes equals 120% or more of the sum of the issue price, accrued original issue discount and contingent additional principal, if any, for a specified measurement period.


2)	Holders may surrender zero-coupon subordinated notes for conversion during any period in which the rating assigned to the zero-coupon subordinated notes by S&P’s Ratings Services is BB- or lower.

The Company believes these embedded derivatives had no fair value at December 31, 2018, and 2017. These embedded derivatives also had no impact on the consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016.

Foreign Currency Forward Contracts

The Company periodically enters into foreign currency forward contracts, which are recognized as assets or liabilities at their fair value. These contracts do not qualify for hedge accounting and the changes in fair value are recorded directly to earnings. The contracts are short-term in nature and the fair value of these contracts is based on market prices for comparable contracts. The fair value of these contracts is not significant as of December 31, 2018.

Cross Currency Swaps

During the first quarter of 2018, the Company entered into six USD to Swiss Franc cross-currency swap agreements with an aggregate notional value of $600.0 and which were accounted for as a hedge against its net investment in a Swiss subsidiary. Of the notional value, $300.0 were due to mature in 2022 and $300.0 were due to mature in 2025. These cross currency swaps maturing in 2022 and 2025 were settled on December 10, 2018 in cash.

During the fourth quarter of 2018, the Company entered into six new USD to Swiss Franc cross-currency swap agreements with an aggregate notional value of $600.0 and which are accounted for as a hedge against the impact of foreign exchange movements on its net investment in a Swiss Franc functional currency subsidiary. Of the notional value, $300.0 matures in 2022 and $300.0 matures in 2025. These cross currency swaps maturing in 2022 and 2025 are included in other long-term assets as of December 31, 2018. Changes in the fair value of the cross-currency swaps are charged or credited through accumulated other comprehensive income in the Consolidated Balance Sheet until the hedged item is recognized in earnings. The cumulative amount of the fair value hedging adjustment included in the current value of the cross currency swaps is $(2.8) for the year ended December 31, 2018, and was recognized as currency translation within the Consolidated Statement of Comprehensive Earnings. There were no amounts reclassified from the Consolidated Statement of Comprehensive Earnings to the Consolidated Statement of Operations during the year ended December 31, 2018.

The table below presents the fair value of derivatives on a gross basis and the balance sheet classification of those instruments:



		December 31, 2018				December 31, 2017
		Fair Value of Derivative				Fair Value of Derivative
	Balance Sheet Caption	Asset	Liability		U.S. Dollar Notional	Asset	Liability	U.S. Dollar Notional
Derivatives Designated as Hedging Instruments
Interest rate swap	Other assets, net	—	—		—	4.1	—	600.0
Interest rate swap	Other liabilities	—	(3.1	)	600.0	—	—	—
Cross currency swaps asset	Other liabilities	—	(2.8	)	600.0	—	—	—

The table below provides information regarding the location and amount of pretax (gains) losses of derivatives designated in fair value hedging relationships:



	Amount of pre-tax gain/(loss) included in other comprehensive income									Amounts reclassified to the Statement of Operations
	Year Ended December 31,									Year Ended December 31,
	2018			2017			2016			2018		2017		2016
Interest rate swap contracts	$	(7.2	)	$	(10.5	)	$	(7.0	)	$	—	$	—	$	—
Cross currency swaps	$	21.6		$	—		$	—		$	—	$	—	$	—

No gains or losses from derivative instruments classified as hedging instruments have been recognized into income for the years ended December 31, 2018, 2017 or 2016.