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Financial Instruments | 12 Months Ended
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Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments | Financial Instruments The Company operates globally with manufacturing and sales facilities 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 and interest rates. 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 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, the Company discontinues hedge accounting prospectively and immediately recognizes the gains and losses associated with those hedges. There were no material adjustments as a result of ineffectiveness to the results of operations for the years ended December 31, 2020, 2019 and 2018. 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. 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 and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of December 31, 2020, the term of derivative instruments hedging forecasted transactions ranged up to 18 months. The following activity related to cash flow hedges was recorded in Accumulated other comprehensive loss as of December 31:
| Accumulated Unrealized Derivative
| Gains (Losses)
| 2020 |  | 2019
(in millions) | Pretax |  | After-tax |  | Pretax |  | After-tax
Beginning balance | $ | 1.1 |  |  | $ | (5.5) |  |  | $ | 6.2 |  |  | $ | (1.9) |
Net change in value of outstanding hedges | (6.4) |  |  | (4.7) |  |  | 5.1 |  |  | 3.6 |
Net amount recognized into earnings | (6.8) |  |  | (5.0) |  |  | (10.2) |  |  | (7.2) |
Ending balance | $ | (12.1) |  |  | $ | (15.2) |  |  | $ | 1.1 |  |  | $ | (5.5) |
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. Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum. As of December 31, 2020, the notional value of commodity swap contracts outstanding was $10.0 million, with the contracts maturing through 2021. The Company had no outstanding commodity swap contracts at December 31, 2019. The amount of gain or loss associated with the change in fair value of these instruments is 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 December 31, 2020, the Company estimates that during the next 12 months it will reclassify $0.1 million of net gains (based on current prices) from Accumulated other comprehensive loss to Cost of sales. Foreign Currency Derivatives. 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 December 31, 2020 and December 31, 2019 had notional contract values of $395.9 million and $332.5 million, respectively. There were no option contracts outstanding at December 31, 2020. Option contracts outstanding at December 31, 2019, had a notional contract value of $17.8 million. The forward and options contracts outstanding at December 31, 2020, mature during 2021 and 2022 and mainly relate to t he Euro, Australian dollar, Canadian dollar and Japanese yen. As of December 31, 2020, the Company estimates that during the next 12 months, it will reclassify approximately $8.2 million of net losses (based on rates as of December 31, 2020) from Accumulated other comprehensive loss to Cost of sales. Interest Rate Derivatives. The Company previously entered into fixed-to-floating interest rate swaps to convert a portion of its long-term debt from fixed to floating rate debt. In the second half of 2019, the Company settled its fixed-to-floating interest rate swaps, resulting in a net deferred gain of $2.5 million included within Debt. The Company will reclassify $0.7 million of net deferred gains from Debt to Interest expense during the next 12 months. As a result, there are no outstanding interest rate swaps as of both December 31, 2020 and December 31, 2019. The Company may also enter into forward-starting interest rate swaps to hedge the interest rate risk associated with anticipated debt issuances. There were no forward-starting interest rate swaps outstanding at December 31, 2020 or December 31, 2019, however the Company had $1.4 million and $2.0 million, respectively, of net deferred losses associated with previously settled forward-starting interest rate swaps which were included in Accumulated other comprehensive loss. As of December 31, 2020, the Company will reclassify approximately $0.6 million of net losses resulting from settled forward-starting interest rate swaps from Accumulated other comprehensive loss to Interest expense during the next 12 months. As of December 31, 2020 and December 31, 2019, 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
|  |  |  | 2020 |  | 2019 |  |  |  | 2020 |  | 2019
Derivatives Designated as Cash Flow Hedges |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Prepaid expenses and other |  | $ | 1.3 |  |  | $ | 4.1 |  |  | Accrued expenses |  | $ | 11.3 |  |  | $ | 2.3 |
Commodity contracts |  | Prepaid expenses and other |  | 0.9 |  |  | — |  |  | Accrued expenses |  | — |  |  | — |
Total |  |  |  | $ | 2.2 |  |  | $ | 4.1 |  |  |  |  | $ | 11.3 |  |  | $ | 2.3 |
Other Hedging Activity |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Prepaid expenses and other |  | $ | 0.0 |  |  | $ | 0.1 |  |  | Accrued expenses |  | $ | 0.7 |  |  | $ | 0.9 |
The effect of derivative instruments on the Consolidated Statements of Operations for the years ended December 31, 2020 and December 31, 2019 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)
|  | 2020 |  | 2019 |  |  |  | 2020 |  | 2019
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | Interest expense |  | $ | (0.6) |  |  | $ | (0.6) |
Foreign exchange contracts |  | (7.3) |  |  | 5.1 |  |  | Cost of sales |  | 7.4 |  |  | 10.8 |
Commodity contracts |  | 0.9 |  |  | — |  |  | Cost of sales |  | 0.0 |  |  | — |
Total |  | $ | (6.4) |  |  | $ | 5.1 |  |  |  |  | $ | 6.8 |  |  | $ | 10.2 |
Derivatives Designated as Fair Value Hedging Instruments |  | Location of Gain (Loss) on Derivatives Recognized in Earnings |  | Amount of Gain (Loss) on Derivatives Recognized in Earnings
|  |  |  | 2020 |  | 2019
Interest rate contracts |  | Interest expense |  | $ | 0.7 |  |  | $ | 0.1 |
Other Hedging Activity |  | Location of Gain (Loss) on Derivatives Recognized in Earnings |  | Amount of Gain (Loss) on Derivatives Recognized in Earnings
|  |  |  | 2020 |  | 2019
Foreign exchange contracts |  | Cost of sales |  | $ | (0.8) |  |  | $ | 2.4 |
Foreign exchange contracts |  | Other expense, net |  | 1.0 |  |  | (1.3) |
Total |  |  |  | $ | 0.2 |  |  | $ | 1.1 |
Fair Value of Other Financial Instruments. The carrying values of the Company’s short-term financial instruments, including cash and cash equivalents and accounts and notes receivable approximate their fair values because of the short maturity of these instruments. At December 31, 2020 and December 31, 2019, the fair value of the Company’s long-term debt was approximately $1,062.3 million and $1,214.6 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note 7 – 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 $972.1 million and $1,131.6 million as of December 31, 2020 and December 31, 2019, respectively.

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- 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
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