Financial Instruments

6 Months Ended

Jul. 03, 2015

Derivative Instruments and Hedges, Assets [Abstract]

Financial Instruments

Financial Instruments

The Company is exposed to various market risks, including changes in interest rates, foreign currency exchange rates and raw material (commodity) prices. To manage risks associated with the volatility of these natural business exposures, the Company enters into interest rate, commodity and foreign currency derivative agreements, and copper and aluminum forward pricing agreements. The Company does not purchase or sell derivative instruments for trading purposes. The Company does not engage in derivative contracts for which a lack of marketplace quotations would necessitate the use of fair value estimation techniques.

The Company enters into commodity instruments to hedge the purchase of copper, aluminum and lead in future periods and foreign currency exchange contracts principally to hedge the currency fluctuations in certain transactions denominated in foreign currencies, thereby reducing the Company’s risk that would otherwise result from changes in exchange rates. Principal transactions hedged during the year were firm sales and purchase commitments. The fair value of foreign currency contracts represents the amount required to enter into offsetting contracts with similar remaining maturities based on quoted market prices.

As of July 3, 2015 and December 31, 2014, there were no derivatives that were designated as cash flow hedges. In the three and six months ended July 3, 2015 and June 27, 2014, there was no activity related to derivatives that were designated as cash flow hedges. Changes in the fair value of economic hedges are recognized in current period earnings.

Fair Value of Derivatives Instruments

The notional amounts and fair values of derivatives not designated as cash flow hedges at July 3, 2015 and December 31, 2014 are shown below (in millions):

	July 3, 2015						December 31, 2014
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset (1)		Liability (2)				Asset (1)		Liability (2)
Derivatives not designated as cash flow hedges:
Commodity futures	$	96.8	$	0.6	$	3.3	$	104.0	$	0.5	$	3.7
Foreign currency exchange	104.0		0.6		4.4		110.3		3.7		4.1
			$	1.2	$	7.7			$	4.2	$	7.8

(1) Balance recorded in “Prepaid expenses and other” and “Other non-current assets”

(2) Balance recorded in “Accrued liabilities” and “Other liabilities”

As of July 3, 2015 and December 31, 2014, all financial instruments held by the Company were subject to enforceable master netting arrangements held by various financial institutions. In general, the terms of our agreements provide that in the event of an early termination the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty.  The Company's accounting policy is to not offset these positions in the Condensed Consolidated Balance Sheets.  As of July 3, 2015 and December 31, 2014, the net positions of the enforceable master netting agreements are not significantly different from the gross positions noted in the table above. Depending on the extent of an unrealized loss position on a derivative contract held by the Company, certain counterparties may require collateral to secure the Company's derivative contract position. As of July 3, 2015 and December 31, 2014, there were no contracts held by the Company that required collateral to secure the Company's derivative liability positions.