XML 58 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
Financial Instruments
9 Months Ended
Sep. 30, 2014
Financial Instruments
9. Financial Instruments

We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates and commodities used as raw materials in our products. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company. In addition, from time to time, we enter into commodity swaps.

Our primary foreign currency hedge contracts pertain to the Canadian dollar, the Chinese yuan and the Mexican peso. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at September 30, 2014 was $274.6 million, representing a net settlement asset of $1.0 million. Based on foreign exchange rates as of September 30, 2014, we estimate that $0.8 million of net foreign currency derivative gains included in other comprehensive income as of September 30, 2014 will be reclassified to earnings within the next twelve months.

The fair values of derivative instruments on the consolidated balance sheets as of September 30, 2014 and December 31, 2013 were:

 

          Fair Value  
(In millions)   

Location

   September 30,
2014
     December 31,
2013
 

Assets

     

Foreign exchange contracts

   Other current assets    $ 2.1       $ 2.1   

Net investment hedges

   Other current assets      0.3         0.6   
     

 

 

    

 

 

 
           Total assets    $ 2.4       $ 2.7   

Liabilities

     

Foreign exchange contracts

   Other current liabilities    $ 1.4       $ 0.3   

 

The effects of derivative financial instruments on the statements of comprehensive income for the nine and three months ended September 30, 2014 and 2013 were:

 

(In millions)         Gain Recognized in Income  
          Nine Months Ended September 30,  

Type of hedge

  

Location

   2014      2013  

Cash flow

   Cost of products sold    $ 0.4       $ 2.3   

Fair value

   Other income, net      1.6         1.3   
     

 

 

    

 

 

 

Total

      $ 2.0       $ 3.6   

 

(In millions)         Gain Recognized in Income  
          Three Months Ended September 30,  

Type of hedge

  

Location

   2014     2013  

Cash flow

   Cost of products sold    $ (0.2   $ 0.9   

Fair value

   Other income, net      0.8        1.3   
     

 

 

   

 

 

 

Total

      $ 0.6      $ 2.2   

The effective portion of cash flow hedges recognized in other comprehensive income were net (losses) gains of $(0.1) million and $3.3 million in the nine months ended September 30, 2014 and 2013, respectively. The effective portion of cash flow hedges recognized in other comprehensive income were net gains of $2.8 million and $1.0 million in the three months ended September 30, 2014 and 2013, respectively. In the nine and three months ended September 30, 2014 and 2013, the ineffective portion of cash flow hedges recognized in other expense (income), net, was insignificant.