NOTE 8.

DERIVATIVES

The Company is exposed to certain financial risk from volatility in interest rates, foreign exchange rates and commodity prices. The risk is managed through the use of financial derivative instruments including interest rate swaps, foreign currency forward contracts and commodity swaps. The Company’s current derivative instruments are used strictly as an economic hedge and not for speculative purposes. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk.

Interest Rate

The Company is subject to interest rate risk related to the Senior Secured Credit Facility and enters into interest rate swap contracts that are based on the LIBOR to manage a portion of this exposure. The Company has not elected hedge accounting treatment for these derivatives, and as a result, fair value adjustments are charged directly to Interest expense in the Consolidated Statements of Comprehensive Income. A summary of the Company’s interest rate derivatives as of December 31, 2014 and December 31, 2013 follows (dollars in millions):


	December 31, 2014					December 31, 2013
	Notional Amount		Fair Value			Notional Amount		Fair Value
3.75% Interest Rate Swap H, Aug 2011 – Aug 2014	$	—	$	—		$	350.0	$	(7.2	)
3.77% Interest Rate Swap I, Aug 2011 – Aug 2014		—		—			350.0		(7.2	)
2.96% Interest Rate Swap J, Aug 2013 – Aug 2014		—		—			125.0		(2.0	)
3.05% Interest Rate Swap K, Aug 2013 – Aug 2014		—		—			125.0		(2.0	)
3.44% Interest Rate Swap L, Aug 2016 – Aug 2019*		75.0		(2.3	)		75.0		(0.4	)
3.43% Interest Rate Swap M, Aug 2016 – Aug 2019*		100.0		(3.0	)		100.0		(0.4	)
3.37% Interest Rate Swap N, Aug 2016 – Aug 2019*		75.0		(2.1	)		75.0		(0.2	)
3.19% Interest Rate Swap O, Aug 2016 – Aug 2019*		75.0		(1.7	)		75.0		0.2
3.08% Interest Rate Swap P, Aug 2016 – Aug 2019*		75.0		(1.5	)		75.0		0.4
2.99% Interest Rate Swap Q, Aug 2016 – Aug 2019*		50.0		(0.9	)		50.0		0.4
2.98% Interest Rate Swap R, Aug 2016 – Aug 2019*		50.0		(0.9	)		50.0		0.4
2.73% Interest Rate Swap S, Aug 2016 – Aug 2019*		50.0		(0.5	)		—		—
2.74% Interest Rate Swap T, Aug 2016 – Aug 2019*		75.0		(0.8	)		—		—
2.66% Interest Rate Swap U, Aug 2016 – Aug 2019*		50.0		(0.4	)		—		—
2.60% Interest Rate Swap V, Aug 2016 – Aug 2019*		50.0		(0.3	)		—		—
2.40% Interest Rate Swap W, Aug 2016 – Aug 2019*		25.0		0.0			—		—

* includes LIBOR floor of 1.00%	$	750.0	$	(14.4	)	$	1,450.0	$	(18.0	)

As of December 31, 2014, the Company did not have any interest rate derivatives subject to credit-risk or collateral requirement. As of December 31, 2013, certain of the Company’s interest rate derivatives contained credit-risk and collateral contingent features under which downgrades in the Company’s credit rating would have required the Company to increase its collateral. As of December 31, 2013, certain interest rate derivatives also contained provisions under which the Company was required to post additional collateral if the LIBOR interest rate curve reached certain levels.

As of December 31, 2014 and December 31, 2013, the Company had recorded cash collateral of $0.0 million and $1.7 million, respectively, in Other current assets in the Condensed Consolidated Balance Sheets, as the balances are subject to frequent change.

Currency Exchange

The Company’s business is subject to foreign exchange rate risk. As a result, the Company enters into various forward rate contracts that qualify as derivatives under the authoritative accounting guidance to manage certain of these exposures. Forward contracts are used to hedge forecasted transactions and known exposure of payables denominated in a foreign currency. The Company generally has not elected to apply hedge accounting under the authoritative accounting guidance and recorded the unrealized fair value adjustments and realized gains and losses associated with these contracts in Other expense, net in the Consolidated Statements of Comprehensive Income during the period of change.

The following table summarizes the outstanding foreign currency forward contracts as of December 31, 2014 and 2013 (amounts in millions):


	December 31, 2014					December 31, 2013
	Notional Amount		Fair Value			Notional Amount		Fair Value
Japanese Yen (JPY)	¥	300.0	$	(0.3	)	¥	600.0	$	(0.3	)

			$	(0.3	)			$	(0.3	)

Commodity

The Company’s business is subject to commodity price risk, primarily with component suppliers. As a result, the Company enters into various commodity swap contracts that qualify as derivatives under the authoritative accounting guidance to manage certain of these exposures. Swap contracts are used to hedge forecasted transactions either of the commodity or of components containing the commodity. The Company has not qualified for hedge accounting treatment for these commodity contracts, and as a result, unrealized fair value adjustments and realized gains and losses associated with these contracts were charged directly to Other expense, net in the Consolidated Statements of Comprehensive Income during the period of change.

The following table summarizes the outstanding commodity swaps as of December 31, 2014 and December 31, 2013 (dollars in millions):


	December 31, 2014						December 31, 2013
	Notional Amount		Quantity	Fair Value			Notional Amount		Quantity	Fair Value
Aluminum	$	11.3	6,200 metric tons	$	(0.7	)	$	23.8	11,875 metric tons	$	(1.6	)
Natural Gas	$	0.2	60,000 MMBtu		0.0		$	0.3	90,000 MMBtu		0.0

				$	(0.7	)				$	(1.6	)

The following tabular disclosures further describe the Company’s derivative instruments and their impact on the financial condition of the Company (dollars in millions):


	December 31, 2014				December 31, 2013
	Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
Derivatives not designated as hedging instruments
Foreign currency contracts	Other current liabilities	$	(0.3	)	Other current liabilities	$	(0.3	)
Commodity contracts					Other current and non-current assets		0.1
	Other current and non-current liabilities		(0.7	)	Other current and non-current liabilities		(1.7	)
Interest rate contracts					Other non- current assets		1.5
	Other non- current liabilities		(14.4	)	Other current and non-current liabilities		(19.5	)

Total derivatives not designated as hedging instruments		$	(15.4	)		$	(19.9	)

The fair values of the derivatives are recorded between Other current and non-current assets and Other current and non-current liabilities as appropriate in the Consolidated Balance Sheets. As of December 31, 2014, the amount recorded to Other current liabilities for foreign currency contracts was ($0.3) million. The amounts recorded to Other current and non-current liabilities for commodity contracts were ($0.6) million and ($0.1) million, respectively. The amounts recorded to Other non-current liabilities for interest rate contracts were ($14.4) million, respectively.

As of December 31, 2013, the amount recorded to Other current liabilities for foreign currency contracts was ($0.3) million. The amounts recorded to Other current and non-current assets for commodity contracts were $0.1 million and $0.0 million, respectively. The amounts recorded to Other current and non-current liabilities for commodity contracts were ($1.5) million and ($0.2) million, respectively. The amount recorded to Other non-current assets for interest rate contracts was $1.5 million. The amounts recorded to Other current and non-current liabilities for interest rate contracts were ($18.5) million and ($1.0) million, respectively.

The impact on the Company’s Consolidated Statements of Comprehensive Income related to foreign currency and commodity contracts can be found in NOTE 11, and the following tabular disclosure describes the location and impact on the Company’s results of operations related to unrealized gain (loss) on interest rate derivatives (dollars in millions):


	December 31, 2014		December 31, 2013		December 31, 2012
Location of impact on results of operations
Interest expense	$	3.5	$	34.3	$	25.5