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Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments
The Company’s risk management objective is to ensure that business exposures to risks that have been identified and measured, and are capable of being controlled, are minimized using the most effective and efficient methods to eliminate, reduce, or transfer such exposures.  Operating decisions consider these associated risks and structure transactions to avoid these risks whenever possible.
Use of derivative instruments is consistent with the overall business and risk management objectives of the Company. Derivative instruments may be used to manage business risk within limits specified by the Company’s risk policy and manage exposures that have been identified through the risk identification and measurement process, provided that they clearly qualify as “hedging” activities as defined in the risk policy.  Use of derivative instruments is not automatic, nor is it necessarily the only response to managing pertinent business risk.  Use is permitted only after the risks that have been identified are determined to exceed defined tolerance levels and are considered to be unavoidable.
The primary risks managed by the Company by using derivative instruments are commodity price risk and foreign currency exchange risk. Swap contracts on various commodities are entered into to help manage the price risk associated with forecasted purchases of materials used in the Company’s manufacturing process.  The Company also enters into various foreign currency derivative instruments to help manage foreign currency risk associated with the Company’s projected purchases and sales and foreign currency denominated receivable and payable balances.
ASC Topic 815-10 requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position.  In accordance with ASC Topic 815-10, the Company designates commodity swaps and foreign currency exchange contracts as cash flow hedges of forecasted purchases of commodities and currencies.
For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.  Gains and losses on the derivative instruments representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.  In the next twelve months, the Company estimates that $0.2 million of unrealized losses, net of tax, related to commodity price and currency rate hedging will be reclassified from other comprehensive income into earnings.  Foreign currency and commodity hedging is generally completed prospectively on a rolling basis for 12 and 24 months, respectively, depending on the type of risk being hedged.
As of March 31, 2017 and December 31, 2016, the Company had the following outstanding commodity and foreign currency exchange contracts that were intended to hedge forecasted transactions:
Designated Hedging Instruments
 
Units Hedged
 
 
 
 
Commodity
 
March 31, 2017
 
December 31, 2016
 
Unit
 
Type
Natural Gas
 
3,579

 
26,807

 
MMBtu
 
Cash Flow
Steel
 
1,945

 
3,190

 
Tons
 
Cash Flow
 
Designated Hedging Instruments
 
Units Hedged
 
 
Currency
 
March 31, 2017
 
December 31, 2016
 
Type
Australian Dollar
 
1,380,374

 
611,143

 
Cash Flow
European Euro
 
4,609,005

 
9,834,120

 
Cash Flow
South Korean Won
 
83,579,000

 
218,408,100

 
Cash Flow
Singapore Dollar
 
300,000

 
900,000

 
Cash Flow
United States Dollar
 
—

 
2,311,697

 
Cash Flow
Japanese Yen
 
43,867,400

 
65,502,800

 
Cash Flow

For derivative instruments that are not designated as hedging instruments under ASC Topic 815-10, the gains or losses on the derivatives are recognized in current earnings within Other (expense) income, net in the Condensed Consolidated Statements of Operations.  As of March 31, 2017 and December 31, 2016, the Company had the following outstanding foreign currency exchange contracts that were not designated as hedging instruments:
Non Designated Hedging Instruments
 
Units Hedged
 
 
 
 
Currency
 
March 31,
2017
 
December 31, 2016
 
Recognized Location
 
Purpose
European Euro
 
4,929,005

 
10,502,111

 
Other income, net
 
Accounts Payable and Receivable Settlement
United States Dollar
 
5,550,000

 
15,318,000

 
Other income, net
 
Accounts Payable and Receivable Settlement

The fair value of outstanding derivative contracts recorded as assets in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 was as follows:
Designated Hedging Instruments
 
 
 
ASSET DERIVATIVES
 
 
 
 
March 31, 2017
 
December 31, 2016
(in millions)
 
Balance Sheet Location
 
Fair Value
Derivatives designated as hedging instruments
 
 
 
 

 
 

Foreign exchange contracts
 
Other current assets
 
$
—

 
$
0.1

Commodity contracts
 
Other current assets
 
0.1

 
0.2

Total derivatives designated as hedging instruments
 
 
 
$
0.1

 
$
0.3

 
 
 
 
ASSET DERIVATIVES
 
 
 
 
March 31, 2017
 
December 31, 2016
(in millions)
 
Balance Sheet Location
 
Fair Value
Derivatives NOT designated as hedging instruments
 
 
 
 

 
 

Foreign exchange contracts
 
Other current assets
 
$
—

 
$
0.1

Total derivatives NOT designated as hedging instruments
 
 
 
$
—

 
$
0.1

 
 
 
 
 
 
 
Total asset derivatives
 
 
 
$
0.1

 
$
0.4


The fair value of outstanding derivative contracts recorded as liabilities in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 was as follows:
 
 
 
 
LIABILITY DERIVATIVES
 
 
 
 
March 31, 2017
 
December 31, 2016
(in millions)
 
Balance Sheet Location
 
Fair Value
Derivatives designated as hedging instruments
 
 
 
 

 
 

Foreign exchange contracts
 
Accounts payable and accrued expenses
 
$
0.3

 
$
0.9

Total derivatives designated as hedging instruments
 
 
 
$
0.3

 
$
0.9

 
 
 
 
LIABILITY DERIVATIVES
 
 
 
 
March 31, 2017
 
December 31, 2016
(in millions)
 
Balance Sheet Location
 
Fair Value
Derivatives NOT designated as hedging instruments
 
 
 
 

 
 

Foreign exchange contracts
 
Accounts payable and accrued expenses
 
$
—

 
$
0.1

Total derivatives NOT designated as hedging instruments
 
 
 
$
—

 
$
0.1

 
 
 
 
 
 
 
Total liability derivatives
 
 
 
$
0.3

 
$
1.0