XML 22 R10.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Financial Instruments | 9 Months Ended
--- | ---
Oct. 01, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments | 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. 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 each 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, the Company discontinues hedge accounting prospectively and immediately recognizes the gains and losses associated with those hedges. There were no material adjustments to the results of operations for the three months and nine months ended October 1, 2016 and October 3, 2015 as a result of ineffectiveness. The fair 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 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. Use of derivative financial instruments exposes the Company to credit risk with its counterparties when the fair value of a derivative contract is an asset. The Company mitigates this risk by entering into derivative contracts with highly rated counterparties. The maximum amount of loss due to counterparty credit risk is limited to the asset value of derivative financial instruments. Cash Flow Hedges. The Company enters into certain derivative instruments that are designated and qualify as cash flow hedges. The Company executes both forward and option contracts, based on forecasted transactions, to manage foreign currency exchange exposure mainly related to inventory purchase and sales transactions. The Company also enters into commodity swap agreements based on anticipated purchases of copper and natural gas to manage risk related to price changes. From time-to-time, the Company 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, 2016, the term of derivative instruments hedging forecasted transactions ranged from one to 15 months. Fair Value Hedges. From time-to-time, the Company enters into fixed-to-floating interest rate swaps to convert a portion of the Company's long-term debt from fixed to floating rate debt. An interest rate swap is entered into with the expectation that the change in the fair value of the interest rate swap will offset the change in the fair value of the debt instrument attributable to changes in the benchmark interest rate. Each period, the change in the fair value of the interest rate swap asset or liability is recorded in debt and the difference between the fixed interest payment and floating interest receipts is recorded as a net adjustment to interest expense. Other Hedging Activity. The Company has entered into certain foreign currency forward contracts that have not been designated as a hedge for accounting purposes. These contracts are used to manage foreign currency exposure related to changes in the value of assets or liabilities caused by changes in foreign exchange rates. 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. In addition, other hedging activity includes commodity swap agreements that are used to hedge purchases of aluminum. These hedges do not qualify for hedge accounting. The commodity swap agreements are based on anticipated purchases of aluminum and are used to manage risk related to price changes. The change in the fair value of the aluminum derivative contract is recorded through earnings, each period as incurred. 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 exposures 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, 2016, December 31, 2015 and October 3, 2015 had notional contract values of $248.9 million, $273.5 million and $276.6 million, respectively. Option contracts outstanding at October 1, 2016, December 31, 2015 and October 3, 2015 had notional contract values of $39.3 million, $51.0 million and $42.7 million, respectively. The forward and options contracts outstanding at October 1, 2016 mature during 2016 and 2017 and mainly relate to the Euro, Japanese yen, Australian dollar, Canadian dollar, Swedish krona, Brazilian real, British pound, Norwegian krone, Mexican peso, Hungarian forint and New Zealand dollar. As of October 1, 2016, the Company estimates that during the next 12 months, it will reclassify approximately $0.1 million of net losses (based on current rates) from Accumulated other comprehensive loss to Cost of sales. Interest Rate. The Company enters into fixed-to-floating interest rate swaps to convert a portion of the Company's long-term debt from fixed to floating rate debt. As of October 1, 2016, December 31, 2015 and October 3, 2015, the outstanding swaps had notional contract values of $200.0 million, of which $150.0 million corresponds to the Company's 4.625 percent Senior notes due 2021 and $50.0 million corresponds to the Company's 7.375 percent Debentures due 2023. These instruments have been designated as fair value hedges, with the fair value recorded in long-term debt. The Company also enters into forward-starting interest rate swaps from time-to-time to hedge the interest rate risk associated with anticipated debt issuances. There were no forward-starting interest rate swaps outstanding at October 1, 2016, December 31, 2015 or October 3, 2015. As of October 1, 2016, December 31, 2015 and October 3, 2015, the Company had $4.8 million, $5.1 million and $5.1 million, respectively, of net deferred losses associated with all settled forward-starting interest rate swaps, which were included in Accumulated other comprehensive loss. As of October 1, 2016, the Company estimates that during the next 12 months, it will reclassify approximately $1.1 million of net losses resulting from settled forward-starting interest rate swaps from Accumulated other comprehensive loss to Interest expense. Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum, copper and natural gas. Commodity swap contracts outstanding at October 1, 2016, December 31, 2015 and October 3, 2015 had notional contract values of $2.3 million, $10.8 million and $14.3 million, respectively. The contracts outstanding mature through 2016. The amount of gain or loss associated with the change in fair value of these instruments is either recorded through earnings each period as incurred or, if designated as cash flow hedges, deferred in Accumulated other comprehensive loss and recognized in Cost of sales in the same period or periods during which the hedged transaction affects earnings. As of October 1, 2016, the Company estimates that during the next 12 months it will reclassify approximately $0.1 million in net losses (based on current prices) from Accumulated other comprehensive loss to Cost of sales. As of October 1, 2016, December 31, 2015 and October 3, 2015, 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
|  |  |  | Oct. 1, 2016 |  | Dec. 31, 2015 |  | Oct. 3, 2015 |  |  |  | Oct. 1, 2016 |  | Dec. 31, 2015 |  | Oct. 3, 2015
Derivatives Designated as Cash Flow Hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Prepaid expenses and other |  | $ | 3.1 |  |  | $ | 5.9 |  |  | $ | 5.9 |  |  | Accrued expenses |  | $ | 3.1 |  |  | $ | 1.3 |  |  | $ | 1.0 |
Commodity contracts |  | Prepaid expenses and other |  | — |  |  | — |  |  | — |  |  | Accrued expenses |  | 0.1 |  |  | 0.5 |  |  | 0.5 |
Total |  |  |  | $ | 3.1 |  |  | $ | 5.9 |  |  | $ | 5.9 |  |  |  |  | $ | 3.2 |  |  | $ | 1.8 |  |  | $ | 1.5 |
Derivatives Designated as Fair Value Hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | Prepaid expenses and other |  | $ | 2.9 |  |  | $ | 2.1 |  |  | $ | 3.0 |  |  | Accrued expenses |  | $ | 2.1 |  |  | $ | 1.4 |  |  | $ | 1.8 |
Interest rate contracts |  | Other long-term assets |  | 7.0 |  |  | 4.0 |  |  | 5.3 |  |  | Other long-term liabilities |  | — |  |  | — |  |  | — |
Total |  |  |  | $ | 9.9 |  |  | $ | 6.1 |  |  | $ | 8.3 |  |  |  |  | $ | 2.1 |  |  | $ | 1.4 |  |  | $ | 1.8 |
Other Hedging Activity |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Prepaid expenses and other |  | $ | 0.2 |  |  | $ | 1.5 |  |  | $ | 1.0 |  |  | Accrued expenses |  | $ | 0.5 |  |  | $ | 0.2 |  |  | $ | 0.5 |
Commodity contracts |  | Prepaid expenses and other |  | — |  |  | — |  |  | — |  |  | Accrued expenses |  | 0.3 |  |  | 2.2 |  |  | 2.5 |
Total |  |  |  | $ | 0.2 |  |  | $ | 1.5 |  |  | $ | 1.0 |  |  |  |  | $ | 0.8 |  |  | $ | 2.4 |  |  | $ | 3.0 |
The effect of derivative instruments on the Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended October 1, 2016 and October 3, 2015 was:
(in millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives Designated as Cash Flow Hedging 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)
|  | Three Months Ended |  | Nine Months Ended |  |  |  | Three Months Ended |  | Nine Months Ended
|  | Oct. 1, 2016 |  | Oct. 3, 2015 |  | Oct. 1, 2016 |  | Oct. 3, 2015 |  |  |  | Oct. 1, 2016 |  | Oct. 3, 2015 |  | Oct. 1, 2016 |  | Oct. 3, 2015
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | Interest expense |  | $ | (0.3 | ) |  | $ | (0.1 | ) |  | $ | (0.3 | ) |  | $ | (0.1 | )
Foreign exchange contracts |  | (0.2 | ) |  | 5.0 |  |  | (3.2 | ) |  | 10.5 |  |  | Cost of sales |  | 0.4 |  |  | 2.4 |  |  | 3.1 |  |  | 9.5 |
Commodity contracts |  | 0.0 |  |  | (0.3 | ) |  | 0.0 |  |  | (0.7 | ) |  | Cost of sales |  | (0.1 | ) |  | 0.1 |  |  | (0.5 | ) |  | 1.1 |
Total |  | $ | (0.2 | ) |  | $ | 4.7 |  |  | $ | (3.2 | ) |  | $ | 9.8 |  |  |  |  | $ | 0.0 |  |  | $ | 2.4 |  |  | $ | 2.3 |  |  | $ | 10.5 |
Derivatives Designated as Fair Value Hedging Instruments |  | Location of Gain on Derivatives Recognized in Earnings |  | Amount of Gain on Derivatives Recognized in Earnings
|  |  |  | Three Months Ended |  | Nine Months Ended
|  |  |  | Oct. 1, 2016 |  | Oct. 3, 2015 |  | Oct. 1, 2016 |  | Oct. 3, 2015
Interest rate contracts |  | Interest expense |  | $ | 0.6 |  |  | $ | 1.2 |  |  | $ | 2.2 |  |  | $ | 3.4 |
Other Hedging Activity |  | Location of Gain (Loss) on Derivatives Recognized in Earnings |  | Amount of Gain (Loss) on Derivatives Recognized in Earnings
|  |  |  | Three Months Ended |  | Nine Months Ended
|  |  |  | Oct. 1, 2016 |  | Oct. 3, 2015 |  | Oct. 1, 2016 |  | Oct. 3, 2015
Foreign exchange contracts |  | Cost of sales |  | $ | (2.2 | ) |  | $ | 4.9 |  |  | $ | (8.6 | ) |  | $ | 8.8 |
Foreign exchange contracts |  | Other income, net |  | 0.3 |  |  | 0.8 |  |  | 1.0 |  |  | 0.3 |
Commodity contracts |  | Cost of sales |  | 0.1 |  |  | (1.4 | ) |  | 0.3 |  |  | (5.6 | )
Total |  |  |  | $ | (1.8 | ) |  | $ | 4.3 |  |  | $ | (7.3 | ) |  | $ | 3.5 |
Fair Value of Other Financial Instruments. The carrying values of the Company’s short-term financial instruments, including cash and cash equivalents, accounts and notes receivable and short-term debt approximate their fair values because of the short maturity of these instruments. At October 1, 2016, December 31, 2015 and October 3, 2015, the fair value of the Company’s long-term debt was approximately $485.4 million, $454.7 million and $462.8 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note 6 – Fair Value Measurements, including quoted market prices or discounted cash flows based on quoted market rates for similar types of debt. The carrying value of long-term debt, including current maturities, was $447.9 million, $448.5 million and $453.1 million as of October 1, 2016, December 31, 2015 and October 3, 2015, respectively.

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://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 2: 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=64837297&loc=SL5624171-113959 Reference 3: 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=64837297&loc=d3e41620-113959 Reference 4: 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=64837297&loc=SL5624163-113959 Reference 5: 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=64837297&loc=SL5579240-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624177-113959 Reference 7: 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=35736893&loc=d3e80784-113994 Reference 8: 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=64837297&loc=d3e41641-113959 Reference 9: 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=64837297&loc=SL5579245-113959 Reference 10: 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=64837297&loc=SL5624258-113959 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=35736893&loc=d3e80748-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708775-113959 Reference 13: 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=64837297&loc=SL5708773-113959 Reference 14: 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=64837297&loc=SL5618551-113959 Reference 15: 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=64837297&loc=SL5580258-113959 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=64837297&loc=SL5624181-113959 Reference 17: 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 18: 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=64837297&loc=d3e41638-113959 Reference 19: 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=26873400&loc=d3e23780-122690 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration