Derivative Financial Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

18. Derivative Financial Instruments

The Company utilizes derivative instruments to manage exposures to risks that have been identified and measured and are capable of being controlled. The primary risks managed by the company by using derivative instruments are commodity price risk associated with copper and foreign currency exchange risk associated with a number of currencies, principally the U.S. dollar, the Canadian dollar, the New Zealand dollar, the Euro and British pounds. Swap contracts on copper are used to manage the price risk associated with forecasted purchases of materials used in the Company’s manufacturing processes. Generally, the Company will not hedge cash flow exposures for durations longer than 30 months and the Company has hedged certain volumes of copper through December 2019. The Company enters into foreign currency forward contracts to manage foreign currency risk associated with the Company’s receivable and payable balances. Generally, the Company enters into master netting arrangements with the counterparties and offsets net derivative positions with the same counterparties. Currently, the Company’s agreements do not require cash collateral.

ASC Topic 815-10, “Derivatives and Hedging,” requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. Derivative instruments’ fair value is determined using significant other observable inputs, or Level 2 in the fair value hierarchy. In accordance with ASC Topic 815-10, the Company designates certain of its commodity swaps as cash flow hedges of forecasted purchases of commodities. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive (loss) income and is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative instruments representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. The amount of hedge ineffectiveness charged to profit and loss is not material for any period presented.

For those commodity swaps which are not designated as cash flow hedges, the fair value of the commodity swap is recognized as an asset or liability in the consolidated balance sheet and the related gain or loss on the derivative is reported in current earnings.

As of December 31, 2016 and December 31, 2015, the Company had outstanding copper swap contracts of the following amounts:

	Units Outstanding (in Pounds)		Net Fair Value - Asset (Liability)
	December 31, 2016	December 31, 2015	December 31, 2016		December 31, 2015
(Amounts in millions)
Cash flow hedges	42.6	17.3	$	10.6	$	(9.8	)
Not designated as hedges	6.5	4.0		1.0		(0.7	)
Total	49.1	21.3	$	11.6	$	(10.5	)

As of December 31, 2016 and December 31, 2015, the fair value of the outstanding copper swap contracts is recorded in the balance sheet as follows:

	December 31, 2016			December 31, 2015
(Dollars in millions)
Other current assets	$	12.5		$	0.1
Accrued liabilities		(0.9	)		(10.6	)
Net asset (liability) on balance sheet	$	11.6		$	(10.5	)
Accumulated other comprehensive gain (loss), net of tax	$	6.9		$	(6.1	)

In the next twelve months the Company estimates that $4.1 million of unrealized gains, net of tax, related to commodity price hedging will be reclassified from other comprehensive income (loss) into earnings.

See the Consolidated Statement of Comprehensive Income and Consolidated Statement of Shareholders’ Equity for amounts recorded in other comprehensive income and for amounts reclassified from accumulated other comprehensive income into net income for the periods specified below. For the twelve months ended December 31, 2016 and 2015, the following amounts were recognized in earnings related to copper swap contracts:

	Twelve Months Ended December 31,
	2016			2015
(Dollars in millions)
Gain (loss) from ineffectiveness of cash flow hedges	$	(0.4	)	$	(0.1	)
Gain (loss) from contracts not designated as hedges		1.7			(0.7	)
Net	$	1.3		$	(0.8	)

Forward contracts related to foreign currency are not designated as hedges and fair value changes in these contracts are immediately charged to earnings and are classified in cost of sales in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss). As of December 31, 2016, the Company has outstanding foreign currency forward contracts with a net fair value totaling $1.0 million, consisting of a gross derivative liability of $0.9 million (recognized in accrued liabilities in the balance sheet) and a gross derivative asset of $1.9 million (recognized in other current assets in the balance sheet.) As of December 31, 2015, the Company has outstanding currency forward contracts with a net fair value totaling $(1.9) million, recognized as a liability in accrued liabilities in the Consolidated Balance Sheet.

As of December 31, 2016 and December 31 2015, the net currency units outstanding were:

	December 31, 2016		December 31, 2015
(In millions)
British Pounds		GBP 7.3		GBP 5.9
New Zealand Dollars		NZD 15.5		NZD 22.5
United States Dollars		USD 24.7		USD 40.0
Canadian Dollars		CAD 0.3		CAD 0.0