XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.20.2

Derivative Financial Instruments | 9 Months Ended
--- | ---
Sep. 30, 2020
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Note 6 — Derivative Financial Instruments Interest Rate Swap and Interest Lock Agreements In January 2020, we terminated €45 million of interest rate swaps when we repaid the Euro term loan recognizing a charge of $0.7 million. These interest rate swaps fixed the interest rate at a weighted average of 0.5%. These swaps were designated as cash flow hedges to floating rate bank loans, therefore, the fair value of the agreements was recorded in other assets or as a liability with a corresponding amount to other comprehensive loss. The Company had treasury lock agreements to protect against unfavorable movements in the benchmark treasury rate related to the issuance of our 3.95% Senior Unsecured Notes. These hedges were designated as cash flow hedges; therefore, any change in fair value was recorded as a component of other comprehensive loss. As part of the issuance of these notes, we net settled the derivatives and therefore the previously deferred gains recorded in other comprehensive loss will be released to interest expense over the life of the senior notes. The effect of these treasury locks reduced the effective interest rate on these notes by approximately 0.25%. Foreign Currency Forward Exchange Contracts A number of our European subsidiaries are exposed to the impact of exchange rate volatility between the U.S. dollar and the subsidiaries’ functional currencies, being either the Euro or the British Pound sterling. We entered into contracts to exchange U.S. dollars for Euros and British Pound sterling through March 2023, which we account for as cash flow hedges. The aggregate notional amount of these contracts was $272.5 million and $426.9 million at September 30, 2020 and December 31, 2019, respectively. The purpose of these contracts is to hedge a portion of the forecasted transactions of our European subsidiaries under long-term sales contracts with certain customers. These contracts are expected to provide us with a more balanced matching of future cash receipts and expenditures by currency, thereby reducing our exposure to fluctuations in currency exchange rates. The effective portion of the hedges, gains of $14.4 million and losses of $0.1 million, were recorded in other comprehensive loss for the quarter and nine months ended September 30, 2020 and losses of $16.9 million and $25.7 million for the quarter and nine months ended September 30, 2019. We classified $7.2 million of the carrying amount of these contracts as assets ($4.6 million of which was recorded in prepaid expenses and other current assets) and $6.5 million as liabilities ($0.7 million of which is recorded in non-current liabilities), on the condensed consolidated balance sheets at September 30, 2020, and $3.7 million of the carrying amount of these contracts was classified in assets ($1.3 million of which was recorded in prepaid expenses and other current assets) and $15.5 million as liabilities ($2.9 million of which is in other non-current liabilities) at December 31, 2019. We recognized net losses of $2.6 million and $12.7 million in gross margin during the quarter and nine months ended September 30, 2020, and net losses of $3.8 million and $8.4 million for the quarter and nine months ended September 30, 2019. In addition, we enter into foreign exchange forward contracts which are not designated as hedges. These are used to provide an offset to transactional gains or losses arising from the re-measurement of non-functional monetary assets and liabilities such as accounts receivable. The change in the fair value of the derivatives is recorded in the statement of operations. There are no credit contingency features in these derivatives. During the quarters ended September 30, 2020 and 2019, we recognized net foreign exchange losses of $0.9 million and losses of $1.3 million, respectively, in the condensed consolidated statements of operations. During the nine months ended September 30, 2020 and 2019, we recognized net foreign exchange losses of $2.5 million and $1.9 million, respectively. The net foreign exchange impact recognized from these hedges offsets the translation exposure of these transactions. The carrying amount of the contracts for derivatives not designated as hedging instruments was $0.2 million classified as current assets at September 30, 2020, and $0.6 million as current assets and less than $0.1 million of current liabilities on our consolidated balance sheets at December 31, 2019, in the condensed consolidated balance sheets. The change in fair value of our foreign currency forward exchange contracts under hedge designations recorded net of tax within accumulated other comprehensive loss for the quarters and nine months ended September 30, 2020 and September 30, 2019 was as follows:
|  | Quarter Ended September 30, |  |  | Nine Months Ended September 30, |
(In millions) |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Unrealized losses at beginning of period, net of tax |  | $ | (12.3 | ) |  | $ | (13.8 | ) |  | $ | (8.4 | ) |  | $ | (10.6 | )
Losses reclassified to net sales |  |  | 2.0 |  |  |  | 3.0 |  |  |  | 9.7 |  |  |  | 6.5 |
Increase (decrease) in fair value |  |  | 11.1 |  |  |  | (12.9 | ) |  |  | (0.5 | ) |  |  | (19.6 | )
Unrealized gains (losses) at end of period, net of tax |  | $ | 0.8 |  |  | $ | (23.7 | ) |  | $ | 0.8 |  |  | $ | (23.7 | )
Unrealized losses of $1.2 million recorded in accumulated other comprehensive loss, plus a net tax benefit of $0.1 million, as of September 30, 2020, are expected to be reclassified into earnings over the next twelve months as the hedged sales are recorded. Commodity Swap Agreements On occasion we enter into commodity swap agreements to hedge against price fluctuations of raw materials, including propylene (the principal component of acrylonitrile). As of September 30, 2020, we had commodity swap agreements with a notional value of $10.6 million. The swaps mature monthly through March 2022. The swaps are accounted for as a cash flow hedge of our forward raw material purchases. To ensure the swaps are highly effective, all of the critical terms of the swap matched the terms of the hedged items. The fair value of the commodity swap agreements was a liability of $3.2 million ($0.2 million of which was in other non-current liabilities) at September 30, 2020, and a liability of $5.4 million ($1.1 million of which was in other non-current liabilities) at December 31, 2019.

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://fasb.org/us-gaap/role/ref/legacyRef -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