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62 NEWELL RUBBERMAID 2011 Annual Report
2011 Financial Statements and Related Information
Derivative instruments are accounted for at fair value. The accounting for changes in the fair value of a derivative depends on the
intended use and designation of the derivative instrument. For a derivative instrument that is designated and qualifies as a fair value
hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, is
recognized in current earnings. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of
the gain or loss on the derivative is initially reported as a component of accumulated other comprehensive income (loss) (“AOCI”), net
of tax, and is subsequently reclassified into earnings when the hedged transaction affects earnings. The ineffective portion of the gain
or loss is recognized in current earnings. Gains and losses from changes in fair values of derivatives that are not designated as hedges
for accounting purposes are recognized currently in earnings, and such amounts were not material for 2011, 2010 and 2009.
The following table summarizes the Company’s outstanding derivative instruments and their effects on the Consolidated Balance
Sheets as of December 31, 2011 and 2010 (in millions):
Assets Liabilities
Derivatives designated Balance Sheet Balance Sheet
as hedging instruments Location 2011 2010 Location 2011 2010
Interest rate swaps Other assets $35.8 $42.3 Other noncurrent liabilities $ — $ —
Foreign exchange
contracts on
inventory-related Prepaid expenses
purchases and other 1.9 1.4 Other accrued liabilities — 2.0
Foreign exchange
contracts on
intercompany Prepaid expenses
borrowings and other 0.5 1.2 Other accrued liabilities — —
Total assets $38.2 $44.9 Total liabilities $ — $2.0
The fair values of outstanding derivatives that are not designated as hedges for accounting purposes were not material as of
December 31, 2011 and 2010.
The Company is not a party to any derivatives that require collateral to be posted prior to settlement. During 2011, the Company, at
its option, terminated certain interest rate swap contracts that were previously accounted for as fair value hedges. See Footnote 9 for
further details.
Fair Value Hedges
The pretax effects of derivative instruments designated as fair value hedges on the Company’s Consolidated Statements of Operations
for 2011, 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 2011 2010 2009
Interest rate swaps Interest expense, net $ 16.2 $ 23.9 $(43.9)
Fixed-rate debt Interest expense, net $(16.2) $(23.9) $ 43.9
The Company did not realize any ineffectiveness related to fair value hedges during 2011, 2010 and 2009.