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Financial Instruments | 9 Months Ended
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Oct. 01, 2011
Financial Instruments [Abstract] |
Financial Instruments | Note 3 – Financial Instruments The Company operates globally, with manufacturing and sales facilities in various locations around the world. Due to the Company's global operations, the Company engages in activities involving both financial and market risks. The Company utilizes normal operating and financing activities, along with derivative financial instruments, to minimize these risks. Derivative Financial Instruments. The Company uses derivative financial instruments to manage its risks associated with movements in foreign currency exchange rates, interest rates and commodity prices. Derivative instruments are not used for trading or speculative purposes. For certain derivative contracts, on the date a derivative contract is entered into, the Company designates the derivative as a hedge of a forecasted transaction (cash flow hedge). The Company formally documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. This process includes linking derivatives that are designated as hedges to specific forecasted transactions. The Company also assesses, both at the hedge's inception and monthly thereafter, whether the derivatives used in hedging transactions are highly effective in offsetting the changes in the anticipated cash flows of the hedged item. If the hedging relationship ceases to be highly effective, or it becomes probable that a forecasted transaction is no longer expected to occur, gains and losses on the derivative are recorded in Cost of sales or Interest expense as appropriate. There were no material adjustments as a result of ineffectiveness to the results of operations for the three months and nine months ended October 1, 2011 and October 2, 2010. The fair market value of derivative financial instruments is determined through market-based valuations and may not be representative of the actual gains or losses that will be recorded when these instruments mature due to future fluctuations in the markets in which they are traded. The effects of derivative and financial instruments are not expected to be material to the Company's financial position or results of operations when considered together with the underlying exposure being hedged. Fair Value Hedges. During 2011 and 2010, the Company entered into foreign currency forward contracts to manage foreign currency exposure related to changes in the value of assets or liabilities caused by changes in the exchange rates of foreign currencies. The change in the fair value of the foreign currency derivative contract and the corresponding change in the fair value of the asset or liability of the Company are both recorded through earnings each period as incurred. Cash Flow Hedges. The Company enters into certain derivative instruments that qualify as cash flow hedges. The Company executes both forward and option contracts, based on forecasted transactions, to manage foreign exchange exposure mainly related to inventory purchase and sales transactions. The Company also enters into commodity swap agreements, based on anticipated purchases of aluminum and natural gas, to manage risk related to price changes. The Company also enters into forward starting interest rate swaps to hedge the interest rate risk associated with the anticipated issuance of debt. A cash flow hedge requires that, as changes in the fair value of derivatives occur, the portion of the change deemed to be effective is recorded temporarily in Accumulated other comprehensive loss, an equity account, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of October 1, 2011, the term of derivative instruments hedging forecasted transactions ranged from one to 25 months. Foreign Currency. The Company enters into forward and option contracts to manage foreign exchange exposure related to forecasted transactions, and assets and liabilities that are subject to risk from foreign currency rate changes. These include product costs; revenues and expenses; associated receivables and payables; intercompany obligations and receivables; and other related cash flows. Forward exchange contracts outstanding at October 1, 2011 and December 31, 2010 had notional contract values of $113.0 million and $138.3 million, respectively. Option contracts outstanding at October 1, 2011 and December 31, 2010 had notional contract values of $126.5 million and $181.1 million, respectively. The forward and options contracts outstanding at October 1, 2011 mature during 2011 and 2012 and mainly relate to the Euro, Canadian dollar, Mexican peso, Australian dollar, British pound, Japanese yen, Swedish krona, New Zealand dollar, Norwegian krone, and Hungarian forint. As of October 1, 2011, the Company estimates that during the next 12 months, it will reclassify approximately $3.5 million in net losses (based on current rates) from Accumulated other comprehensive loss to Cost of sales. Interest Rate. In the third quarter of 2011, the Company entered into forward starting interest rate swaps with a combined notional value of $50.0 million to hedge the interest rate risk associated with an anticipated debt issuance in 2013 to refinance the Company's senior notes due in 2016. As of October 1, 2011 and December 31, 2010, the Company had $0.7 million and $3.9 million, respectively, of net deferred gains associated with all forward starting interest rate swaps, which were included in Accumulated other comprehensive loss. These amounts include gains deferred on $250.0 million of notional value forward starting interest rate swaps terminated in July 2006, losses deferred on $150.0 million of notional value forward starting swaps, which were terminated in August 2008, and losses deferred on $50.0 million of notional value forward starting swaps, which were outstanding at October 1, 2011. For the three months and nine months ended October 1, 2011, the Company recognized $0.2 million and $0.7 million, respectively, of net amortization gains in Interest expense related to all settled forward starting interest rate swaps. Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum and natural gas. Commodity swap contracts outstanding at October 1, 2011 and December 31, 2010 had notional values of $23.5 million and $14.0 million, respectively. The contracts outstanding mature through 2013. The amount of gain or loss associated with these instruments is deferred in Accumulated other comprehensive loss and is recognized in Cost of sales in the same period or periods during which the hedged transaction affects earnings. As of October 1, 2011, the Company estimates that during the next 12 months, it will reclassify approximately $1.1 million in net losses (based on current prices) from Accumulated other comprehensive loss to Cost of sales. As of October 1, 2011, the fair values of the Company's derivative instruments were:
(in millions) |  |  |  |  |
|  | Derivative Assets |  | Derivative Liabilities |
Instrument |  | Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value |
Foreign exchange contracts |  | Prepaid expenses and other |  | $ | 5.3 |  | Accrued expenses |  | $ | 1.0 |
Commodity contracts |  | Prepaid expenses and other |  |  | 0.4 |  | Accrued expenses |  |  | 2.2 |
Interest rate contracts |  | Prepaid expenses and other |  |  | - |  | Accrued expenses |  |  | 2.5 |
Total |  |  |  | $ | 5.7 |  |  |  | $ | 5.7 |
As of December 31, 2010, the fair values of the Company's derivative instruments were:
(in millions) |  |  |  |  |
|  | Derivative Assets |  | Derivative Liabilities |
Instrument |  | Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value |
Foreign exchange contracts |  | Prepaid expenses and other |  | $ | 1.1 |  | Accrued expenses |  | $ | 3.4 |
Commodity contracts |  | Prepaid expenses and other |  |  | 2.4 |  | Accrued expenses |  |  | 0.2 |
Total |  |  |  | $ | 3.5 |  |  |  | $ | 3.6 |
The effect of derivative instruments on the Consolidated Statement of Operations for the three months ended October 1, 2011 was:
(in millions) |  |  |
Fair Value Hedging Instruments |  | Location of Gain on Derivatives Recognized in Earnings |  | Amount of Gain on Derivatives Recognized in Earnings |
Foreign exchange contracts |  | Cost of sales |  | $ | 1.2 |
Foreign exchange contracts |  | Other income (expense), net |  |  | 0.2 |
Total |  |  |  | $ | 1.4 |
Cash Flow Hedge Instruments |  | Amount of Gain (Loss) on Derivatives Recognized in Accumulated Other Comprehensive Loss (Effective Portion) |  | Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Effective Portion) |  | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Effective Portion) |
Interest rate contracts |  | $ | (2.5 | ) | Interest expense |  | $ | 0.2 |
Foreign exchange contracts |  |  | 3.9 |  | Cost of sales |  |  | (3.3 | )
Commodity contracts |  |  | (2.5 | ) | Cost of sales |  |  | 0.9 |
Total |  | $ | (1.1 | ) |  |  | $ | (2.2 | )
The effect of derivative instruments on the Consolidated Statement of Operations for the nine months ended October 1, 2011 was:
(in millions) |  |  |
Fair Value Hedging Instruments |  | Location of Gain (Loss) on Derivatives Recognized in Earnings |  | Amount of Gain (Loss) on Derivatives Recognized in Earnings |
Foreign exchange contracts |  | Cost of sales |  | $ | (1.1 | )
Foreign exchange contracts |  | Other income (expense), net |  |  | 0.1 |
Total |  |  |  | $ | (1.0 | )
Cash Flow Hedge Instruments |  | Amount of Loss on Derivatives Recognized in Accumulated Other Comprehensive Loss (Effective Portion) |  | Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Effective Portion) |  | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Effective Portion) |
Interest rate contracts |  | $ | (2.5 | ) | Interest expense |  | $ | 0.7 |
Foreign exchange contracts |  |  | (2.8 | ) | Cost of sales |  |  | (9.4 | )
Commodity contracts |  |  | (1.3 | ) | Cost of sales |  |  | 2.8 |
Total |  | $ | (6.6 | ) |  |  | $ | (5.9 | )
The effect of derivative instruments on the Consolidated Statement of Operations for the three months ended October 2, 2010 was:
(in millions) |  |
Fair Value Hedging Instruments |  | Location of Loss on Derivatives Recognized in Earnings (Loss) |  | Amount of Loss on Derivatives Recognized in Earnings (Loss) |
Foreign exchange contracts |  | Cost of sales |  | $ | (2.2 | )
Foreign exchange contracts |  | Other income (expense), net |  |  | (0.2 | )
Total |  |  |  | $ | (2.4 | )
Cash Flow Hedge Instruments |  | Amount of Gain (Loss) on Derivatives Recognized in Accumulated Other Comprehensive Loss (Effective Portion) |  | Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings (Loss) (Effective Portion) |  | Amount of Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings (Loss) (Effective Portion) |
Interest rate contracts |  | $ | - |  | Interest expense |  | $ | 0.2 |
Foreign exchange contracts |  |  | (5.4 | ) | Cost of sales |  |  | 2.0 |
Commodity contracts |  |  | 1.6 |  | Cost of sales |  |  | 0.5 |
Total |  | $ | (3.8 | ) |  |  | $ | 2.7 |
The effect of derivative instruments on the Consolidated Statement of Operations for the nine months ended October 2, 2010 was:
(in millions) |  |  |  |  |
Fair Value Hedging Instruments |  | Location of Gain on Derivatives Recognized in Earnings (Loss) |  | Amount of Gain on Derivatives Recognized in Earnings (Loss) |
Foreign exchange contracts |  | Cost of sales |  | $ | 1.8 |
Foreign exchange contracts |  | Other income (expense), net |  |  | 0.3 |
Total |  |  |  | $ | 2.1 |
Cash Flow Hedge Instruments |  | Amount of Loss on Derivatives Recognized in Accumulated Other Comprehensive Loss (Effective Portion) |  | Location of Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings (Loss) (Effective Portion) |  | Amount of Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings (Loss) (Effective Portion) |
Interest rate contracts |  | $ | - |  | Interest expense |  | $ | 0.7 |
Foreign exchange contracts |  |  | (0.2 | ) | Cost of sales |  |  | 2.2 |
Commodity contracts |  |  | (0.9 | ) | Cost of sales |  |  | 1.0 |
Total |  | $ | (1.1 | ) |  |  | $ | 3.9 |
Concentration of Credit Risk. The Company enters into financial instruments and invests a portion of its cash reserves in marketable debt securities with banks and investment firms with which the Company has business relationships and regularly monitors the credit ratings of its counterparties. The Company sells a broad range of recreation products to a worldwide customer base and extends credit to its customers based upon an ongoing credit evaluation program. The Company's business units maintain credit organizations to manage financial exposure. Credit risk assessments are performed on an individual account basis. Accounts are not aggregated into categories for credit risk determinations. There are no concentrations of credit risk resulting from accounts receivable that are considered material to the Company's financial position. Refer to Note 8 – Financing Receivables for more information. Fair Value of Other Financial Instruments. The carrying values of the Company's short-term financial instruments, including cash equivalents, accounts and notes receivable and short-term debt, including current maturities of long-term debt, approximate their fair values because of the short maturity of these instruments. At October 1, 2011, the fair value of the Company's long-term debt was approximately $722.6 million as estimated using quoted market prices or discounted cash flows based on market rates for similar types of debt. The carrying value of long-term debt, including current maturities, was $702.7 million as of October 1, 2011.

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- Definition The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5580258-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5618551-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5624163-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5708773-113959 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6935481&loc=d3e41638-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5624171-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6935481&loc=d3e41620-113959 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6935481&loc=d3e41641-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6887037&loc=d3e80748-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6887037&loc=d3e80784-113994 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5579240-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6935481&loc=d3e41635-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5624181-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5624258-113959 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5579245-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 20: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 45 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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