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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2018
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 in our condensed consolidated balance sheet at fair value. 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 September 30, 2018, the total amount of these forward exchange contracts was €10.0 million, Singapore Dollar (“SGD”) 601.5 million and $13.4 million. 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. 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 September 30, 2018, we had outstanding foreign currency contracts to purchase and sell certain pairs of currencies, as follows:
(in millions) |  |  | Sell
Currency | Purchase |  | U. S. Dollar (“USD”) | Euro
USD | 19.9 |  |  | — |  | 16.3 |
Yen | 3,601.4 |  |  | 18.9 |  | 12.0 |
SGD | 21.5 |  |  | 10.7 |  | 4.5 |
At September 30, 2018, a portion of our debt consisted of borrowings denominated in currencies other than USD. We have designated our €21.0 million ($24.3 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 $0.5 million pre-tax ($0.4 million after tax) on this debt was recorded within accumulated other comprehensive loss as of September 30, 2018. 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 Seiko, Ltd. (“Daikyo”). At September 30, 2018, there was a cumulative foreign currency translation loss of $0.2 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 2017, we purchased a series of call options for a total of 125,166 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 May 2019. In April 2018, we purchased a series of call options for a total of 30,612 barrels of crude oil from December 2018 through August 2019. During the three months ended September 30, 2018, the gain recorded in cost of goods and services sold related to these call options was less than $0.1 million. During the nine months ended September 30, 2018, the gain recorded in cost of goods and services sold related to these call options was $0.5 million. As of September 30, 2018, we had outstanding contracts to purchase 72,699 barrels of crude oil from October 2018 to August 2019 at a weighted-average strike price of $74.21 per barrel. Effects of Derivative Instruments on Financial Position and Results of Operations Please refer to Note 9, Fair Value Measurements, for the balance sheet location and fair values of our derivative instruments as of September 30, 2018 and December 31, 2017. The following table summarizes the effects of derivative instruments designated as hedges on other comprehensive income (“OCI”) and earnings, net of tax:
| Amount of Gain (Loss) Recognized in OCI for the |  | Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the |  | Location of Loss (Gain) Reclassified from Accumulated OCI into Income
| Three Months Ended September 30, |  | Three Months Ended September 30, |
($ in millions) | 2018 |  | 2017 |  | 2018 |  | 2017 |  |
Cash Flow Hedges: |  |  |  |  |  |  |  |  |
Foreign currency hedge contracts | $ | 0.1 |  |  | $ | (0.7 | ) |  | $ | — |  |  | $ | 0.4 |  |  | Net sales
Foreign currency hedge contracts | (0.5 | ) |  | (0.9 | ) |  | (0.1 | ) |  | 0.3 |  |  | Cost of goods and services sold
Interest rate swap contracts | — |  |  | — |  |  | — |  |  | 0.2 |  |  | Interest expense
Forward treasury locks | — |  |  | — |  |  | 0.1 |  |  | 0.1 |  |  | Interest expense
Total | $ | (0.4 | ) |  | $ | (1.6 | ) |  | $ | — |  |  | $ | 1.0 |  |  |
Net Investment Hedges: |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency-denominated debt | $ | 0.2 |  |  | $ | (0.5 | ) |  | $ | — |  |  | $ | — |  |  | Other expense
Total | $ | 0.2 |  |  | $ | (0.5 | ) |  | $ | — |  |  | $ | — |  |  |
| Amount of Gain (Loss) Recognized in OCI for the |  | Amount of Loss (Gain) Reclassified from Accumulated OCI into Income for the |  | Location of Loss (Gain) Reclassified from Accumulated OCI into Income
| Nine Months Ended September 30, |  | Nine Months Ended September 30, |
($ in millions) | 2018 |  | 2017 |  | 2018 |  | 2017 |  |
Cash Flow Hedges: |  |  |  |  |  |  |  |  |
Foreign currency hedge contracts | $ | 0.2 |  |  | $ | (1.6 | ) |  | $ | 0.8 |  |  | $ | 0.7 |  |  | Net sales
Foreign currency hedge contracts | 0.9 |  |  | (2.0 | ) |  | 0.4 |  |  | 0.4 |  |  | Cost of goods and services sold
Interest rate swap contracts | — |  |  | — |  |  | — |  |  | 0.5 |  |  | Interest expense
Forward treasury locks | — |  |  | — |  |  | 0.2 |  |  | 0.2 |  |  | Interest expense
Total | $ | 1.1 |  |  | $ | (3.6 | ) |  | $ | 1.4 |  |  | $ | 1.8 |  |  |
Net Investment Hedges: |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency-denominated debt | $ | 0.7 |  |  | $ | (1.7 | ) |  | $ | — |  |  | $ | — |  |  | Other expense
Total | $ | 0.7 |  |  | $ | (1.7 | ) |  | $ | — |  |  | $ | — |  |  |
For the three and nine months ended September 30, 2018 and 2017, there was no material ineffectiveness related to our hedges.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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