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Derivative Instruments and Risk Management
9 Months Ended
Sep. 30, 2012
Derivative Instruments and Risk Management [Abstract]  
DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

NOTE 11 – DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

The Company has limited involvement with derivative instruments and does not trade them. The Company does use derivatives to manage certain foreign currency exchange rate and raw material cost exposures.

The Company has hedged the cost of certain raw materials with commodity swaps which are summarized as follows:

 

                                 
    September 30, 2012     December 31, 2011  

(in millions)

  Carrying
Amount
    Fair
Value
    Carrying
Amount
    Fair
Value
 

Notional quantity – 2,075 tonnes

                  $ 0.2     $ 0.2  

Notional quantity – 525 tonnes

  $ 0.1     $ 0.1                  

The impact on the income statement for the first nine months of 2012 is summarized below:

 

                     

(in millions)

  Gain/(Loss)
Recognized in
OCI on
Derivative
   

Location of Gain/(Loss)

Reclassified from

Accumulated OCI into

Income

  Amount of  Gain/(Loss)
Reclassified from
Accumulated OCI into
Income
 

Commodity contracts

  $ 0.1     Cost of goods sold   $ 0.3  

Taxation

    0.0     Income taxes     (0.1
   

 

 

       

 

 

 
    $ 0.1         $ 0.2  
   

 

 

       

 

 

 

 

We enter into various foreign currency forward exchange contracts to minimize currency exposure from expected future cash flows. The contracts have maturity dates of up to four years at the date of inception. These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for the first nine months ended September 30, 2012 is summarized below:

 

             

(in millions)

 

Location of Gain/(Loss)

Recognized in Income

  Amount of Gain/(Loss)
Recognized in Income
 

Foreign currency forward exchange contracts

  Other income/(expense)   $ 1.1  
       

 

 

 

The Company sells a range of Fuel Specialties, Performance Chemicals and Octane Additives to major oil refineries and chemical companies throughout the world. Credit limits, ongoing credit evaluation and account monitoring procedures are intended to minimize bad debt risk. Collateral is not generally required.