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Derivative Financial Instruments and Fair Value Measurements
 12 Months Ended
Dec. 31, 2011
Derivative Financial Instruments and Fair Value Measurements [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

NOTE 9 — DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

At December 31, 2009, the Company was party to interest rate swap agreements with financial institutions in which the Company pays interest at a fixed rate and receives interest at variable LIBOR rates. These derivative instruments terminated in 2010. These interest rate swap agreements are designated as cash flow hedges.

The Company manages the volatility of cash flows caused by fluctuations in currency rates by entering into foreign exchange forward contracts and options. These derivative instruments may be designated as cash flow hedges that hedge portions of the Company’s anticipated third-party purchases and forecast sales denominated in foreign currencies. The Company also enters into foreign exchange contracts that are not intended to qualify for hedge accounting, but are intended to offset the effect on earnings of foreign currency movements on short and long-term intercompany transactions. Gains and losses on these derivative instruments are recorded through earnings.

For assets and liabilities measured at fair value on a recurring basis, the Company uses an income approach to value the assets and liabilities for outstanding derivative contracts which include interest rate swap and foreign currency forward contracts. The income approach consists of a discounted cash flow model that takes into account the present value of future cash flows under the terms of the contracts using current market information as of the reporting date, such as prevailing interest rates and foreign currency spot and forward rates. The following table provides a summary of the fair values of assets and liabilities ($ in millions):

 

                                 
          Fair Value Measurements at December 31, 2011  
    Total     Quoted Prices in  Active
Markets for Identical
Assets (Level 1)		     Significant Other
Observable Inputs
(Level 2)		     Significant
Unobservable  Inputs
(Level 3)		  

Assets

                                

Derivatives

   $ 0.1     $   -         $ 0.1     $   -      
   

 

 

    

 

 

    

 

 

    

 

 

  

 

                                 
          Fair Value Measurements at December 31, 2011  
    Total     Quoted Prices in  Active
Markets for Identical
Assets (Level 1)		     Significant Other
Observable Inputs
(Level 2)		     Significant
Unobservable  Inputs
(Level 3)		  

Liabilities

                                

Derivatives

   $ 0.8     $   -         $ 0.8     $   -      
   

 

 

    

 

 

    

 

 

    

 

 

  

 

                                 
          Fair Value Measurements at December 31, 2010  
    Total     Quoted Prices in  Active
Markets for Identical
Assets (Level 1)		     Significant Other
Observable Inputs
(Level 2)		     Significant
Unobservable  Inputs
(Level 3)		  

Assets

                                

Derivatives

   $   -         $   -         $   -         $   -      
   

 

 

    

 

 

    

 

 

    

 

 

  

 

                                 
          Fair Value Measurements at December 31, 2010  
    Total     Quoted Prices in  Active
Markets for Identical
Assets (Level 1)		     Significant Other
Observable Inputs
(Level 2)		     Significant
Unobservable  Inputs
(Level 3)		  

Liabilities

                                

Derivatives

   $ 0.6     $   -         $ 0.6     $   -      
   

 

 

    

 

 

    

 

 

    

 

 

  

 

The fair value of the Company’s derivative instruments was recorded as follows at December 31, 2011 and 2010 ($ in millions):

 

                         
   

Asset Derivatives

    

Liability Derivatives

  
   

December 31, 2011

    

December 31, 2011

  
   

Balance Sheet

Location

   Fair
Value		    

Balance Sheet
Location

   Fair
Value		  

Derivatives designated as hedging instruments:

                        

Foreign exchange

   Other current assets   $   -         Other current liabilities   $ 0.8  
       

 

 

        

 

 

  

Total derivatives designated as hedging instruments

         -               0.8  

Derivatives not designated as hedging instruments:

                        

Foreign exchange

   Accounts receivable, net     0.1     Other current liabilities     -      
       

 

 

        

 

 

  

Total derivatives not designated as hedging instruments

         0.1           0.0  
       

 

 

        

 

 

  

Total derivatives

       $ 0.1         $ 0.8  
       

 

 

        

 

 

  
     
   

Asset Derivatives

    

Liability Derivatives

  
   

December 31, 2010

    

December 31, 2010

  
   

Balance Sheet

Location

   Fair
Value		    

Balance Sheet
Location

   Fair
Value		  

Derivatives designated as hedging instruments:

                        

Foreign exchange

   Other current assets   $ -         Other current liabilities   $ 0.2  
       

 

 

        

 

 

  

Total derivatives designated as hedging instruments

         -               0.2  

Derivatives not designated as hedging instruments:

                        

Foreign exchange

   Accounts receivable, net     -         Other current liabilities     0.4  
       

 

 

        

 

 

  

Total derivatives not designated as hedging instruments

         -               0.4  
       

 

 

        

 

 

  

Total derivatives

       $ -             $ 0.6  
       

 

 

        

 

 

  

The effect of derivative instruments on the consolidated statement of operations for the year ended December 31, 2011 and 2010, respectively ($ in millions):

 

                     

2011

   Amount of Gain/(Loss)
Recognized in OCI
on Derivative
(Effective Portion)		    

Location of Gain/(Loss)
Reclassified from
Accumulated OCI into
Income (Effective Portion)

   Amount of Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
(Effective Portion)		  
     

Derivatives in
Cash Flow Hedging
Relationships

      

Foreign exchange

     (0.9 )    Net sales     0.2  
   

 

 

        

 

 

  

Total

   $ (0.9 )        $ 0.2  
   

 

 

        

 

 

  

 

                     

2010
Derivatives in
Cash Flow Hedging
Relationships

   Amount of Gain/(Loss)
Recognized in OCI
on Derivative
(Effective Portion)		    

Location of Gain/(Loss)
Reclassified from
Accumulated OCI into
Income (Effective  Portion)

   Amount of Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
(Effective Portion)		  

Interest rate contracts

   $ 0.4     Interest expense   $ 0.5  

Foreign exchange

     (1.2 )    Net sales     1.0  
   

 

 

        

 

 

  

Total

   $ (0.8 )        $ 1.5  
   

 

 

        

 

 

  

The location and amount of gain (loss) recognized in income on derivatives not designated as hedging instruments are as follows for the years ended December 31, 2011 and 2010, respectively ($ in millions):

 

             

2011

  

Location in Consolidated

Statement of Operations

   Amount of Gain

(Loss)  Recognized		  

Foreign currency contracts

   Other income (expense)     (0.1 ) 
       

 

 

  

Total gain (loss)

       $ (0.1 ) 
       

 

 

  

 

             

2010

  

Location in Consolidated

Statement of Operations

   Amount of Gain

(Loss)  Recognized		  

Foreign currency contracts

   Other income (expense)     1.4  
       

 

 

  

Total gain (loss)

       $ 1.4  
       

 

 

  

At December 31, 2011 and 2010, accumulated other comprehensive loss associated with foreign exchange contracts qualifying for hedge accounting treatment was $0.6 million and $(0.1) million, respectively, net of income tax effects. The Company expects $0.9 million of pre-tax net loss on cash flow hedges that are reported in accumulated other comprehensive loss as of December 31, 2011 to be reclassified into earnings within the next 12 months as the respective hedged transactions affect earnings. The Company’s foreign currency contracts typically do not extend beyond a year.

The following table summarizes the carrying amounts and fair values of the Company’s financial instruments at December 31 ($ in millions):

 

                                 
    2011     2010  
    Notional
Amount		     Fair
Value		     Notional
Amount		     Fair
Value		  

Short-term debt

   $ 9.0     $ 9.0     $ 1.8     $ 1.8  

Long-term debt*

     214.2       212.5       262.1       259.9  

Foreign exchange contracts

     21.8       (0.7 )      28.3       (0.6 ) 

 

* Long-term debt includes financial service borrowings for all periods presented, which is included in discontinued operations, current portions of long term debt and capital lease obligations.

The carrying value of short-term debt approximates fair value due to its short maturity. The fair value of long-term debt is based on interest rates that are currently available to us for issuance of debt with similar terms and remaining maturities.

The following table summarizes the Company’s money market accounts in a three-tier fair value hierarchy as of December 31 ($ in millions):

 

                                                                 
    2011     2010  
    Level 1     Level 2     Level 3     Total     Level 1     Level 2     Level 3     Total  

Cash equivalents

   $   -       $   -       $   -       $   -       $ 37.0     $   -       $ -       $ 37.0  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $   -       $   -       $   -       $   -       $ 37.0     $   -       $   -       $ 37.0