Black & Decker 2012 Annual Report Download - page 88

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74
Balance Sheet
Classification
2012
2011
Balance Sheet
Classification
2012
2011
Derivatives designated as hedging
instruments:
Interest Rate Contracts Cash Flow…….
Other current assets
$
—
$
—
Accrued expenses
$
—
$
86.9
Interest Rate Contracts Fair Value…….
Other current assets
18.5
21.7
Accrued expenses
3.3
5.2
LT other assets
6.4
15.2
LT other liabilities
4.6
—
Foreign Exchange Contracts Cash Flow
Other current assets
—
5.3
Accrued expenses
2.6
1.4
LT other assets
—
—
LT other liabilities
—
0.8
Net Investment Hedge…………………
Other current assets
0.2
27.7
Accrued expenses
25.7
—
$
25.1
$
69.9
$
36.2
$
94.3
Derivatives not designated as hedging
instruments:
Foreign Exchange Contracts…………..
Other current assets
$
73.9
$
48.1
Accrued expenses
$
46.4
$
63.4
LT other assets………………………...
—
24.5
LT other liabilities
8.9
24.0
$
73.9
$
72.6
$
55.3
$
87.4
The counterparties to all of the above mentioned financial instruments are major international financial institutions. The
Company is exposed to credit risk for net exchanges under these agreements, but not for the notional amounts. The credit risk is
limited to the asset amounts noted above. The Company limits its exposure and concentration of risk by contracting with
diverse financial institutions and does not anticipate non-performance by any of its counterparties. Further, as more fully
discussed in Note M, Fair Value Measurements, the Company considers non-performance risk of its counterparties at each
reporting period and adjusts the carrying value of these assets accordingly. The risk of default is considered remote.
In 2012 and 2011, significant cash flows related to derivatives including those that are separately discussed in Cash Flow
Hedges, Fair Value Hedges and Net Investment Hedges below resulted in net cash paid of $79.8 million and $58.9 million,
respectively.
CASH FLOW HEDGES — There was a $93.5 million after-tax loss and a $75.9 million after-tax loss as of December 29,
2012 and December 31, 2011, respectively, reported for cash flow hedge effectiveness in Accumulated other comprehensive
loss. An after-tax loss of $15.1 million is expected to be reclassified to earnings as the hedged transactions occur or as amounts
are amortized within the next twelve months. The ultimate amount recognized will vary based on fluctuations of the hedged
currencies and interest rates through the maturity dates.
The tables below detail pre-tax amounts reclassified from Accumulated other comprehensive income (loss) into earnings for
active derivative financial instruments during the periods in which the underlying hedged transactions affected earnings for the
twelve months ended December 29, 2012 and December 31, 2011 (in millions):
Year-to-date 2012
(In millions)
Gain (Loss)
Recorded in OCI
Classification of
Gain (Loss)
Reclassified from
OCI to Income
Gain (Loss)
Reclassified from
OCI to Income
(Effective Portion)
Gain (Loss)
Recognized in
Income
(Ineffective Portion*)
Interest Rate Contracts……………………...
$
—
Interest expense
$
—
$
—
Foreign Exchange Contracts………………..
$
(11.2)
Cost of sales
$
1.9
—
Year-to-date 2011
(In millions)
Gain (Loss)
Recorded in OCI
Classification of
Gain (Loss)
Reclassified from
OCI to Income
Gain (Loss)
Reclassified from
OCI to Income
(Effective Portion)
Gain (Loss)
Recognized in
Income
(Ineffective Portion*)
Interest Rate Contracts………………………..
$
(69.6)
Interest expense
$
—
$
—
Foreign Exchange Contracts………………….
$
(2.9)
Cost of sales
$
(21.1)
—
* Includes ineffective portion and amount excluded from effectiveness testing on derivatives.