XML 93 R21.htm IDEA: XBRL DOCUMENT v3.3.0.814
Derivative Instruments (Notes)
9 Months Ended
Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
Derivative Instruments
U. S. Steel is exposed to foreign currency exchange rate risks as a result of our European operations. USSE’s revenues are primarily in euros and costs are primarily in U.S. dollars and euros. In addition, foreign cash requirements have been, and in the future may be, funded by intercompany loans, creating intercompany monetary assets and liabilities in currencies other than the functional currency of the entities involved, which can affect income when remeasured at the end of each period.
U. S. Steel uses euro forward sales contracts with maturities no longer than 12 months to exchange euros for U.S. dollars to manage our currency requirements and exposure to foreign currency exchange rate fluctuations. Derivative instruments are required to be recognized at fair value in the consolidated balance sheet. U. S. Steel has not elected to designate these euro forward sales contracts as hedges. Therefore, changes in their fair value are recognized immediately in the consolidated results of operations. The gains and losses recognized on the euro forward sales contracts may also partially offset the accounting remeasurement gains and losses recognized on intercompany loans.
As of September 30, 2015, U. S. Steel held euro forward sales contracts with a total notional value of approximately $257 million. We mitigate the risk of concentration of counterparty credit risk by purchasing our forward sales contracts from several counterparties.
Additionally, U. S. Steel uses fixed-price forward physical purchase contracts to partially manage our exposure to price risk related to the purchases of natural gas and certain nonferrous metals used in the production process. During 2015 and 2014, the forward physical purchase contracts for natural gas and nonferrous metals qualified for the normal purchases and normal sales exemption described in ASC Topic 815 and were not subject to mark-to-market accounting.
The following summarizes the location and amounts of the fair values and gains or losses related to derivatives included in U. S. Steel's consolidated financial statements as of September 30, 2015 and December 31, 2014 and for the three and nine months ended September 30, 2015 and 2014:
 
 
 
 
Fair Value
 
Fair Value
(In millions)
 
Balance Sheet
Location
 
September 30, 2015
 
December 31, 2014
Foreign exchange forward contracts
 
Accounts receivable
 
$
8

 
$
31

Foreign exchange forward contracts
 
Accounts payable
 
$
3

 
$


(In millions)
 
Statement of
Operations
Location
 
Amount of Gain
 
Amount of Gain
 
 
Three Months Ended September 30, 2015
 
Nine Months Ended 
 September 30, 2015
Foreign exchange forward contracts
 
Other financial
costs
 
$

 
$
32


(In millions)
 
Statement of
Operations
Location
 
Amount of Gain
 
Amount of Gain
 
 
Three Months Ended 
 September 30, 2014
 
Nine Months Ended September 30, 2014
Foreign exchange forward contracts
 
Other financial
costs
 
$
33

 
$
36


In accordance with the guidance found in ASC Topic 820 on fair value measurements and disclosures, the fair value of our euro forward sales contracts was determined using Level 2 inputs, which are defined as "significant other observable" inputs. The inputs used are from market sources that aggregate data based upon market transactions.