XML 31 R17.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Derivative Financial Instruments | 12 Months Ended
--- | ---
Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments Our ongoing business operations expose us to various risks such as fluctuating interest rates, foreign exchange rates and increasing commodity prices. To manage these market risks, we periodically enter into derivative financial instruments such as interest rate swaps, options and foreign exchange contracts for periods consistent with and for notional amounts equal to or less than the related underlying exposures. We do not purchase or hold any derivative financial instruments for investment or trading purposes. All derivatives are recorded on the balance sheet at fair value. Interest Rate Risk At December 31, 2016, we had a $34.9 million forward-start interest rate swap outstanding that hedged the variability in cash flows due to changes in the applicable interest rate of our variable-rate five-year term loan. Under this swap, we received variable interest rate payments based on one-month LIBOR plus a margin in return for making monthly fixed interest payments at 5.41%. We designated this swap as a cash flow hedge. On October 2, 2017, we paid the $33.1 million outstanding to extinguish the term loan and terminated the interest-rate swap agreement. Foreign Exchange Rate Risk We have entered into forward exchange contracts, designated as fair value hedges, to manage our exposure to fluctuating foreign exchange rates on cross-currency intercompany loans. As of December 31, 2017, the total amount of these forward exchange contracts was €12.0 million, SGD 171.0 million and $13.4 million. As of December 31, 2016, the total amount of these forward exchange contracts was €57.5 million. In addition, we have entered into several foreign currency contracts, designated as cash flow hedges, for periods of up to eighteen months, intended to hedge the currency risk associated with a portion of our forecasted transactions denominated in foreign currencies. As of December 31, 2017, we had outstanding foreign currency contracts to purchase and sell certain pairs of currencies, as follows:
(in millions) |  |  | Sell
Currency | Purchase |  | USD | Euro
USD | 39.0 |  |  | — |  | 34.4 |
Yen | 5,157.3 |  |  | 23.5 |  | 19.8 |
SGD | 35.2 |  |  | 17.7 |  | 6.9 |
At December 31, 2017, a portion of our debt consisted of borrowings denominated in currencies other than USD. We have designated our €21.0 million ($25.2 million) Euro-denominated borrowings under our Credit Facility as a hedge of our net investment in certain European subsidiaries. A cumulative foreign currency translation loss of $1.3 million pre-tax ($1.2 million after tax) on this debt was recorded within accumulated other comprehensive loss as of December 31, 2017. We have also designated our ¥500.0 million ($4.4 million) Yen-denominated borrowings under our Credit Facility as a hedge of our net investment in Daikyo. At December 31, 2017, there was a cumulative foreign currency translation loss of $0.3 million pre-tax ($0.2 million after tax) on this Yen-denominated debt, which was also included within accumulated other comprehensive loss. Commodity Price Risk Many of our proprietary products are made from synthetic elastomers, which are derived from the petroleum refining process. We purchase the majority of our elastomers via long-term supply contracts, some of which contain clauses that provide for surcharges related to fluctuations in crude oil prices. The following economic hedges did not qualify for hedge accounting treatment since they did not meet the highly effective requirement at inception. In November 2016, we purchased a series of call options for a total of 96,525 barrels of crude oil to mitigate our exposure to such oil-based surcharges and protect operating cash flows with regards to a portion of our forecasted elastomer purchases through November 2017. With these contracts in 2016, the gain recorded in cost of goods and services sold related to these options was less than $0.1 million. During 2017, the loss recorded in cost of goods and services sold related to these options was $0.2 million. In November 2017, we purchased a series of call options for a total of 125,166 barrels of crude oil through May 2019. During 2017, the loss recorded in cost of goods and services sold related to these options was less than $0.1 million. As of December 31, 2017, we had outstanding contracts to purchase 115,701 barrels of crude oil, at a strike price of $70 per barrel. Effects of Derivative Instruments on Financial Position and Results of Operations Please refer to Note 10, Fair Value Measurements, for the balance sheet location and fair values of our derivative instruments as of December 31, 2017 and 2016. The following table summarizes the effects of derivative instruments designated as hedges on OCI and earnings, net of tax, for the year ended December 31:
| Amount of (Loss) Gain Recognized in OCI |  | Amount of Loss (Gain) Reclassified from Accumulated OCI into Income |  | Location of Loss (Gain) Reclassified from Accumulated OCI into Income
($ in millions) | 2017 |  | 2016 |  | 2017 |  | 2016 |  |
Cash Flow Hedges: |  |  |  |  |  |  |  |  |
Foreign currency hedge contracts | $ | (1.7 | ) |  | $ | (0.5 | ) |  | $ | 1.1 |  |  | $ | — |  |  | Net sales
Foreign currency hedge contracts | (2.0 | ) |  | (0.6 | ) |  | 0.8 |  |  | — |  |  | Cost of goods and services sold
Interest rate swap contracts | 0.1 |  |  | (0.1 | ) |  | 0.5 |  |  | 0.8 |  |  | Interest expense
Forward treasury locks | — |  |  | — |  |  | 0.2 |  |  | 0.3 |  |  | Interest expense
Total | $ | (3.6 | ) |  | $ | (1.2 | ) |  | $ | 2.6 |  |  | $ | 1.1 |  |  |
Net Investment Hedges: |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency-denominated debt | $ | (2.4 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | Other expense
Total | $ | (2.4 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  |
During 2017 and 2016, there was no material ineffectiveness related to our hedges.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration