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Newell Rubbermaid Inc. 2010 Annual Report
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NEWELL RUBBERMAID 2010 Annual Report 63
The fair values of outstanding derivatives that are not designated as hedges for accounting purposes were not material as of
December 31, 2010 and 2009. The Company is a party to an interest rate swap in an asset position; in the event the interest rate
swap is in a liability position, settlement could be accelerated if the Company’s credit rating falls below investment-grade. The
Company is not a party to any derivatives that require collateral to be posted prior to settlement.
Fair Value Hedges
The pretax effects of derivative instruments designated as fair value hedges on the Company’s Consolidated Statements of
Operations for the years ended December 31, 2010 and 2009 were as follows (in millions):
Amount of gain (loss) recognized in income
Derivatives in fair value relationships Location of gain (loss) recognized in income 2010 2009
Interest rate swaps Interest expense, net $ 23.9 $(43.9)
Fixed-rate debt Interest expense, net $(23.9) $ 43.9
The Company did not record any ineffectiveness related to fair value hedges during the years ended December 31, 2010 and 2009.
Cash Flow Hedges
The pretax effects of derivative instruments designated as cash flow hedges on the Company’s Consolidated Statements of
Operations and AOCI for the years ended December 31, 2010 and 2009 were as follows (in millions):
Amount of gain (loss)
reclassified from Amount of gain (loss)
Location of gain (loss) AOCI into income recognized in AOCI
Derivatives in cash flow hedging relationships recognized in income 2010 2009 2010 2009
Foreign exchange contracts on
inventory-related purchases Cost of products sold $(1.8) $(2.6) $(1.4) $(9.5)
Foreign exchange contracts on
intercompany borrowings Interest expense, net 0.5 2.5 4.3 7.7
$(1.3) $(0.1) $ 2.9 $(1.8)
The Company did not record any ineffectiveness related to cash flow hedges during the years ended December 31, 2010 and 2009.
The Company received approximately $3.8 million to settle foreign exchange contracts on intercompany borrowings during the
year ended December 31, 2010 and paid approximately $109.0 million to settle foreign exchange contracts on intercompany borrowings
during the year ended December 31, 2009. Such amounts are included in changes in accrued liabilities and other in the Consolidated
Statements of Cash Flows for the years ended December 31, 2010 and 2009.
The Company estimates that during the next 12 months it will reclassify net losses of approximately $0.5 million included in the
pretax amount recorded in AOCI as of December 31, 2010 into earnings, as the anticipated cash flows occur.
Net Investment Hedges
The Company enters into cross-currency interest rate swaps associated with investments and intercompany borrowings designated
as investments in non-U.S. subsidiaries. Effective changes in the fair value of the currency agreements resulting from changes in
the spot non-U.S. currency exchange rate are recognized in AOCI in the Consolidated Balance Sheets to offset the change in the
carrying value of the investment being hedged. Any changes in the fair value of these hedges that are the result of ineffectiveness
are recognized immediately in interest expense, net in the Consolidated Statements of Operations.
The following table summarizes the pre-tax effects of instruments outstanding during the years ended December 31, 2010
and 2009 designated as hedges of investments (in millions):
Amount of gain (loss)
reclassified from Amount of gain (loss)
AOCI into income recognized in AOCI
Derivatives in cash flow hedging relationships 2010 2009 2010 2009
Cross-currency interest rate swaps $ — $ — $ — $(4.4)
The Company paid approximately $17.6 million to settle cross-currency interest rate swaps during the year ended December 31,
2009, and such amount is included in changes in accrued liabilities and other in the Consolidated Statements of Cash Flows for
the year ended December 31, 2009. As of and during the year ended December 31, 2010 and as of December 31, 2009, the Company
was not a party to any cross-currency interest rate swaps.
The Company did not record any ineffectiveness related to derivative and non-derivative instruments designated as hedges
of investments during the years ended December 31, 2010 and 2009.