Derivative Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

In the normal course of business, the Company is exposed to risks relating to changes in foreign currency exchange rates, interest rates and commodity prices. Derivative financial instruments, such as foreign currency exchange forward contracts, interest rate swaps, and commodities futures contracts are used to manage the risks associated with changes in the conditions of those markets. All derivatives are recognized in the Consolidated Balance Sheets at fair value. The counterparties to the Company’s derivative agreements are primarily major international financial institutions. The Company continually monitors its derivative positions and the credit ratings of its counterparties and does not anticipate nonperformance by the counterparties.

Foreign Currency

The Company conducts a significant portion of its business in currencies other than the U.S. Dollar, its functional currency. As a result, the Company’s operating results are affected by foreign currency exchange rate volatility.

As of December 31, 2016, the Company held foreign currency forward contracts to purchase and sell various currencies primarily with U.S. Dollars and Euro. The Company has not designated any foreign currency exchange forward contracts as eligible for hedge accounting. The total U.S. Dollar equivalent of foreign currency exchange forward contracts held at December 31, 2016 was approximately $552 million, all with settlement dates within one year. The total U.S. Dollar equivalent of foreign currency exchange forward contracts held at December 31, 2015 was approximately $254 million.

The following table details the Company's significant outstanding foreign currency forward contracts as of December 31, 2016:

(in millions)	Traded against USD				Traded against EUR (USD equivalent)
Currency	Purchasing		Selling		Purchasing		Selling
Euro (EUR)	$	208.3	$	53.8	$	—	$	—
Brazilian Real (BRL)	48.4		89.8		—		—
Japanese Yen (JPY)	41.7		25.1		1.9		2.3
British Pound (GBP)	25.1		—		5.3		—
South African Rand (ZAR)	—		17.8		—		0.3
Taiwan Dollar (TWD)	16.9		—		—		—
Other	11.9		3.2		—		—
Total	$	352.3	$	189.7	$	7.2	$	2.6

The change in the net fair value of the foreign currency forward contracts is recorded in "(Loss) gain on derivative contracts" in the Consolidated Statements of Operations.

Interest Rates

In August 2015, the Company entered into a series of pay-fixed, receive-floating interest rate swaps with respect to a portion of its indebtedness. The interest rate swaps effectively fix the floating base rate portion of the interest payments on approximately $1.15 billion of the Company's USD denominated debt and €282 million of its Euro denominated debt at 1.96% and 1.20%, respectively, from September 2015 through June 2020.

Changes in the fair value of a derivative that is designated as, and meets all the required criteria of, a cash flow hedge are recorded in "Accumulated other comprehensive income (loss)" and reclassified into earnings as the underlying hedged item affects earnings. Amounts reclassified into earnings related to the interest rate swaps are included in "Interest expense, net" in the Consolidated Statements of Operations.

Commodities

As part of its risk management policy, the Company enters into commodities futures contracts on an ongoing basis for the purpose of mitigating its exposure to fluctuations in prices of certain metals it uses in the production of its finished goods.  The Company held futures contracts to purchase and sell various metals, primarily tin and silver, for a notional amount of $42.0 million and $16.5 million as of December 31, 2016 and 2015, respectively.  All contracts outstanding as of at December 31, 2016 have delivery dates within the next twelve months. The Company has not designated these derivatives as hedging instruments and, accordingly, records changes in the net fair value of the commodities futures contracts in "(Loss) gain on derivative contracts" in the Consolidated Statements of Operations.

Certain subsidiaries of the Company have entered into supply agreements with a third-party that have been deemed to constitute financing agreements with embedded derivative features whose fair value are determined by the change in the market value of the underlying metals between delivery date and measurement date.  Amounts associated with these supply agreements, which serve as the notional value of the embedded derivative, have been recorded in "Inventory" and "Current installments of long-term debt and revolving credit facilities" in the Consolidated Balance Sheets, and totaled $9.9 million and $13.0 million at December 31, 2016 and 2015, respectively. These balances primarily relate to purchases of gold. The fair value of these contracts has been bifurcated and recorded as a derivative liability in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets and totaled $0.2 million at December 31, 2016 and was immaterial at December 31, 2015.

Fair Value of Derivative Instruments

The following table summarizes the fair value of derivative instruments reported in the Consolidated Balance Sheets:

		December 31,
(amounts in millions)		2016			2015
Derivatives designated as hedging instruments:
	Liabilities Balance Sheet Location
Interest rate swaps	Accrued expenses and other current liabilities	$	10.2		$	—
Interest rate swaps	Other long-term liabilities	—			12.5
Derivatives not designated as hedging instruments:
	Assets Balance Sheet Location
Foreign exchange and metals contracts	Other current assets	8.5			1.1
Foreign exchange contracts	Other assets	—			1.0
	Liabilities Balance Sheet Location
Foreign exchange and metals contracts	Accrued expenses and other current liabilities	10.7			1.0
Net derivative contracts liability		$	(12.4	)	$	(11.4	)

For the years ended December 31, 2016, 2015 and 2014, the Company recorded the following realized and unrealized (losses) gains associated with derivative contracts designated as hedging instruments and made the following reclassifications from Accumulated Other Comprehensive Income:

(amounts in millions)	Amount of loss recognized in Other Comprehensive Income for the year ended December 31,						Location of loss reclassified from Accumulated Other Comprehensive Income	Amount of loss reclassified from Accumulated Other Comprehensive Income into income for the year ended December 31,
Derivatives designated as hedging instruments:	2016		2015		2014			2016		2015		2014
Interest rate swaps	$	9.6	$	12.5	$	—	Interest expense, net	$	11.9	$	—	$	—
Foreign exchange contracts	—		—		0.2		Foreign exchange loss	—		—		—
Total	$	9.6	$	12.5	$	0.2		$	11.9	$	—	$	—

The interest rate swaps were deemed highly effective, with no ineffective portions, for the years ended December 31, 2016 and 2015. During the next twelve months, the Company expects to reclassify $10.2 million from "Accumulated other comprehensive income (loss)" to "Interest expense, net" in the Consolidated Statements of Operations.

For the years ended December 31, 2016, 2015 and 2014, the Company recorded the following realized and unrealized (losses) gains associated with derivative contracts not designated as hedging instruments:

(amounts in millions)	Location of (loss) gain recognized in income on derivatives	Amount of (loss) gain recognized in income on derivatives for the year ended December 31,
Derivatives not designated as hedging instruments:		2016			2015			2014
Foreign exchange and metals contracts	(Loss) gain on derivative contracts	$	(12.5	)	$	(74.0	)	$	0.4

The losses recorded for the year ended December 31, 2015 included a $73.7 million fair value loss incurred in connection with instruments entered into in order to hedge the Company's foreign currency exposure related to the Alent Acquisition.

Master Netting Arrangements

In the normal course of business, the Company enters into contracts with certain counterparties to purchase and sell foreign currency exchange forwards and metal futures that contain master netting arrangements, typically in the form of an International Swaps and Derivatives Association (ISDA) or similar agreements. The right to set-off within these agreements is limited to certain termination events, such as bankruptcy or default of either party to the agreement. It is the Company's policy not to offset derivative assets and liabilities and to report such instruments on a gross basis in the Consolidated Balance Sheets.

The following table presents recognized foreign currency exchange forward and metal future derivative contracts that are subject to master netting arrangements but not offset as of December 31, 2016 and 2015, with the "Net" column representing the net impact to the Company's Consolidated Balance Sheets had all set-off rights been exercised:

	December 31, 2016
(amounts in millions)	Amounts offset						Amounts not offset						Net
Financial assets	Gross assets		Gross liabilities offset		Net amounts presented		Financial instruments			Cash collateral paid
Derivative assets	$	6.3	$	—	$	6.3	$	(2.5	)	$	—		$	3.8
	December 31, 2016
	Amounts offset						Amounts not offset						Net
Financial liabilities	Gross liabilities		Gross assets offset		Net amounts presented		Financial instruments			Cash collateral paid
Derivative liabilities	$	8.9	$	—	$	8.9	$	(2.6	)	$	(1.0	)	$	5.3

	December 31, 2015
(amounts in millions)	Amounts offset						Amounts not offset						Net
Financial assets	Gross assets		Gross liabilities offset		Net amounts presented		Financial instruments			Cash collateral paid
Derivative assets	$	3.1	$	—	$	3.1	$	(0.3	)	$	—		$	2.8
	December 31, 2015
	Amounts offset						Amounts not offset						Net
Financial liabilities	Gross liabilities		Gross assets offset		Net amounts presented		Financial instruments			Cash collateral paid
Derivative liabilities	$	1.7	$	—	$	1.7	$	(1.2	)	$	(0.9	)	$	(0.4	)

Collateral paid to counterparties is recorded in "Other current assets" in the Consolidated Balance Sheets.