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Derivatives | 9 Months Ended
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Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Derivatives: Objectives and Strategies for Using Derivative Instruments Commodity Price Risk - We utilize a cash flow hedging program to mitigate our exposure to volatility in the prices of metal commodities used in our production processes. Our hedging program includes the use of futures contracts to lock in prices, and as a result, we are subject to derivative losses should the metal commodity prices decrease and gains should the prices increase. We utilize a dollar cost averaging strategy so that a higher percentage of commodity price exposures are hedged near-term and lower percentages hedged at future dates. This strategy allows for protection against near-term price volatility while allowing us to adjust to market price movements over time. Interest Rate Risk - A portion of our debt bears interest at variable rates, and as a result, we are subject to variability in the cash paid for interest. To mitigate a portion of that risk, we may choose to engage in an interest rate swap hedging strategy to eliminate the variability of interest payment cash flows. We are not currently hedged against interest rate risk. Foreign Currency Risk - Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of assets and liabilities arising in foreign currencies. We seek to mitigate the impact of currency exchange rate movements on certain short-term transactions by periodically entering into foreign currency forward contracts. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 intends to simplify the application of hedge accounting guidance and better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. We early adopted ASU No. 2017-12 during the first quarter of 2018. The adoption of ASU No. 2017-12 did not have a material impact on our consolidated results of operations, cash flows, and statement of financial position. With the early adoption of ASU No. 2017-12 we began entering into commodity futures contracts designated as cash flow hedges related to aluminum purchases. Cash Flow Hedges We have foreign exchange forward contracts and commodity futures contracts designated as cash flow hedges that are scheduled to mature through December 2018 and February 2020, respectively. Unrealized gains or losses from our cash flow hedges are included in Accumulated other comprehensive loss (“AOCL”) and are expected to be reclassified into earnings within the next 18 months based on the prices of the commodities and foreign currencies at the settlement dates. We recorded the following amounts in AOCL related to our cash flow hedges (in millions):
| As of September 30, 2018 |  | As of December 31, 2017
Unrealized losses (gains) on unsettled contracts | $ | 4.9 |  |  | $ | (11.3 | )
Income tax (benefit) expense | (1.1 | ) |  | 3.9 |
Losses (Gains) included in AOCL, net of tax (1) | $ | 3.8 |  |  | $ | (7.4 | )
(1) Assuming commodity and foreign currency prices remain constant, we expect to reclassify $2.9 million of derivative losses into earnings within the next 12 months. We had the following outstanding commodity futures contracts designated as cash flow hedges (in millions of pounds):
| As of September 30, 2018 |  | As of December 31, 2017
Copper | 13.7 |  |  | 20.6 |
Aluminum | 29.3 |  |  | — |
We had the following outstanding foreign exchange forward contracts designated as cash flow hedges (in millions):
| As of September 30, 2018 |  | As of December 31, 2017
Notional Amounts (in local currency): |  |  |
Mexican Peso | 49.2 |  |  | 207.3 |
Canadian Dollar | 12.6 |  |  | 68.6 |
Derivatives not Designated as Cash Flow Hedges For commodity derivatives not designated as cash flow hedges, we follow the same hedging strategy as derivatives designated as cash flow hedges, except that we elect not to designate them as cash flow hedges at the inception of the arrangement. We had the following outstanding commodity futures contracts not designated as cash flow hedges (in millions of pounds):
| As of September 30, 2018 |  | As of December 31, 2017
Copper | 0.8 |  |  | 1.8 |
Aluminum | 1.0 |  |  | 1.8 |
We also had the following outstanding foreign currency forward contracts not designated as cash flow hedges (in millions):
| As of September 30, 2018 |  | As of December 31, 2017
Notional Amounts (in local currency): |  |  |
Chinese Yuan | — |  |  | 73.8 |
Mexican Peso | 68.0 |  |  | 136.6 |
Euro | 28.8 |  |  | 64.4 |
Canadian Dollar | 23.0 |  |  | 27.3 |
British Pound | 8.3 |  |  | 4.5 |
Singapore Dollar | — |  |  | 7.0 |
Australian Dollar | — |  |  | 107.0 |
New Zealand Dollar | — |  |  | 5.0 |
Indian Rupee | — |  |  | 39.8 |
Information about the Locations and Amounts of Derivative Instruments The following tables provide the locations and amounts of derivative fair values in the Consolidated Balance Sheets and derivative gains and losses in the Consolidated Statements of Operations (in millions):
| Fair Values of Derivative Instruments (1)
| Derivatives Designated as Hedging Instruments |  | Derivatives Not Designated as Hedging Instruments
| As of September 30, 2018 |  | As of December 31, 2017 |  | As of September 30, 2018 |  | As of December 31, 2017
Current Assets: |  |  |  |  |  |  |
Other Assets |  |  |  |  |  |  |
Commodity futures contracts | $ | — |  |  | $ | 11.0 |  |  | $ | — |  |  | $ | 1.2 |
Foreign currency forward contracts | 0.5 |  |  | 0.1 |  |  | — |  |  | 0.9 |
Non-Current Assets: |  |  |  |  |  |  |
Other Assets, net |  |  |  |  |  |  |
Commodity futures contracts | — |  |  | 0.6 |  |  | — |  |  | 0.1 |
Total Assets | $ | 0.5 |  |  | $ | 11.7 |  |  | $ | — |  |  | $ | 2.2 |
Current Liabilities: |  |  |  |  |  |  |
Accrued Expenses |  |  |  |  |  |  |
Commodity futures contracts | $ | 5.2 |  |  | $ | — |  |  | $ | 0.3 |  |  | $ | — |
Foreign currency forward contracts | — |  |  | 0.3 |  |  | 0.1 |  |  | 1.1 |
Non-Current Liabilities: |  |  |  |  |  |  |
Other Liabilities |  |  |  |  |  |  |
Commodity futures contracts | 0.3 |  |  | — |  |  | — |  |  | — |
Total Liabilities | $ | 5.5 |  |  | $ | 0.3 |  |  | $ | 0.4 |  |  | $ | 1.1 |
(1) All derivative instruments are classified as Level 2 within the fair value hierarchy. See Note 17 for more information.
Derivatives Designated as Cash Flow Hedges |  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
Amount of Gain reclassified from AOCL into Income (effective portion) (1) |  | $ | (0.3 | ) |  | $ | (3.5 | ) |  | $ | (7.3 | ) |  | $ | (9.4 | )
Amount of (Gains)/Loss recognized in Net income (ineffective portion) (2)(3) |  | — |  |  | (0.1 | ) |  | $ | — |  |  | 1.1 |
Derivatives Not Designated as Hedging Instruments |  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
Amount of Loss/(Gain) Recognized in Net Income: |  |  |  |  |  |  |  |
Commodity futures contracts (2) |  | $ | 0.3 |  |  | $ | (0.2 | ) |  | $ | 0.9 |  |  | $ | (1.3 | )
Foreign currency forward contracts (2) |  | — |  |  | (0.4 | ) |  | (0.3 | ) |  | (4.3 | )
|  | $ | 0.3 |  |  | $ | (0.6 | ) |  | $ | 0.6 |  |  | $ | (5.6 | )
(1) The gain was recorded in Cost of goods sold in the accompanying Consolidated Statements of Operations. (2) The (gain)/loss was recorded in Losses and other expenses, net in the accompanying Consolidated Statements of Operations. (3) ASU 2017-12 eliminates the requirement to disclose the amount of hedge ineffectiveness prospectively because this amount is no longer separately measured and reported.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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