8.	Financial Instruments

We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates and commodities used as raw materials in our products. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company. Raw materials used by the Company are subject to price volatility caused by weather, supply conditions, geopolitical and economic variables, and other unpredictable external factors. As a result, from time to time, we enter into commodity swaps to manage the price risk associated with forecasted purchases of materials used in our operations.

Our primary foreign currency hedge contracts pertain to the Canadian dollar, the Mexican peso, the Chinese yuan and the Euro. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at September 30, 2017 was $190.2 million, representing a net settlement payable of $2.3 million. Based on foreign exchange rates as of September 30, 2017, we estimate that $1.2 million of net foreign currency derivative losses included in other comprehensive income as of September 30, 2017 will be reclassified to earnings within the next twelve months.

The fair values of derivative instruments on the consolidated balance sheets as of September 30, 2017 and December 31, 2016 were as follows:


(In millions)		Fair Value
	Location	September 30, 2017		December 31, 2016
Assets
Foreign exchange contracts	Other current assets	$	3.0	$	2.8
Net investment hedges	Other current assets		0.2		0.6

	Total assets	$	3.2	$	3.4

Liabilities
Foreign exchange contracts	Other current liabilities	$	5.1	$	2.9
Net investment hedges	Other current liabilities		0.4		0.2

	Total current liabilities	$	5.5	$	3.1

The effects of derivative financial instruments on the statements of comprehensive income for the nine and three months ended September 30, 2017 and 2016 were:


(In millions)		Gain (Loss) Recognized in Income Nine Months Ended September 30,
Type of hedge	Location	2017			2016
Cash flow	Cost of products sold	$	0.9		$	(2.6	)
Fair value	Other (income) expense, net		(1.4	)		1.3

Total		$	(0.5	)	$	(1.3	)

(In millions)		Gain (Loss) Recognized in Income Three Months Ended September 30,
Type of hedge	Location	2017			2016
Cash flow	Cost of products sold	$	(0.1	)	$	(1.2	)
Fair value	Other (income) expense, net		(0.9	)		0.3

Total		$	(1.0	)	$	(0.9	)

The effective portion of cash flow hedges recognized in other comprehensive income were net losses of $(0.1) million and $(8.0) million in the nine months ended September 30, 2017 and 2016, respectively. The effective portion of cash flow hedges recognized in other comprehensive income were net losses of $(3.8) million and zero in the three months ended September 30, 2017 and 2016, respectively. In the nine and three months ended September 30, 2017 and 2016, the ineffective portion of cash flow hedges recognized in other (income) expense, net, was insignificant.