Derivative Financial Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company measures its derivatives at fair value using significant observable inputs, which is Level 2 as defined in the fair value hierarchy. The Company uses a present value technique that incorporates the LIBOR swap curve, foreign currency spot rates and foreign currency forward rates to value its derivatives, including its interest rate swap agreements and foreign currency exchange contracts, and also incorporates the effect of its subsidiary and counterparty credit risk into the valuation.

Foreign Currency Derivatives: HBB held forward foreign currency exchange contracts with total notional amounts of $9.0 million and $7.3 million at December 31, 2016 and 2015, respectively, denominated primarily in Canadian dollars and Mexican pesos. The fair value of these contracts approximated a net receivable of $0.1 million and $0.4 million at December 31, 2016 and 2015, respectively.

Forward foreign currency exchange contracts that qualify for hedge accounting are used to hedge transactions expected to occur within the next twelve months. The mark-to-market effect of forward foreign currency exchange contracts that are considered effective as hedges has been included in AOCI.

Interest Rate Derivatives: HBB has interest rate swaps that hedge interest payments on its one-month LIBOR borrowings. During the second quarter of 2016, HBB entered into four delayed start interest rate swap agreements. All swaps have been designated as cash flow hedges.

The following table summarizes the notional amounts, related rates and remaining terms of interest rate swap agreements active and delayed at December 31 in millions:

	Notional Amount				Average Fixed Rate				Remaining Term at
	2016		2015		2016		2015		December 31, 2016
HBB - Interest rate swaps	$	20.0	$	20.0	1.4	%	1.4	%	extending to January 2020
HBB - Delayed start interest rate swaps	$	15.0	$	—	1.6	%	—	%	extending to January 2024
HBB - Delayed start interest rate swaps	$	10.0	$	—	1.7	%	—	%	extending to January 2024

The fair value of HBB's interest rate swap agreements was a net receivable of $0.8 million at December 31, 2016 and net receivable of less than $0.1 million at December 31, 2015. The mark-to-market effect of interest rate swap agreements that are considered effective as hedges has been included in AOCI. The interest rate swap agreements held by HBB on December 31, 2016 are expected to continue to be effective as hedges.

NACoal has interest rate swaps that hedge interest payments on its one-month LIBOR borrowings. The following table summarizes the notional amounts, related rates and remaining terms of the interest rate swap agreement active at December 31 in millions:

	Notional Amount				Average Fixed Rate				Remaining Term at
	2016		2015		2016		2015		December 31, 2016
NACoal	$	80.0	$	100.0	1.4	%	1.4	%	extending to May 2018

The fair value of NACoal's interest rate swap agreement was a net payable of $0.3 million at December 31, 2016. The mark-to-market effect of the interest rate swap agreement that is considered effective as a hedge has been included in AOCI. The interest rate swap agreement held by NACoal on December 31, 2016 is expected to continue to be effective as a hedge.

The following table summarizes the fair value of derivative instruments at December 31 as recorded in the Consolidated Balance Sheets:

	Asset Derivatives					Liability Derivatives
	Balance sheet location	2016		2015		Balance sheet location	2016		2015
Derivatives designated as hedging instruments
Interest rate swap agreements
Current	Prepaid expenses and other	$	14	$	1	Other current liabilities	$	239	$	289
Long-term	Other non-current assets	760		2		Other long-term liabilities	100		409
Foreign currency exchange contracts
Current	Prepaid expenses and other	147		386		Other current liabilities	—		—
Total derivatives		$	921	$	389		$	339	$	698

The following table summarizes the pre-tax impact of derivative instruments for each year ended December 31 as recorded in the Consolidated Statements of Operations:

Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)									Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)									Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative  (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2016			2015			2014				2016			2015			2014				2016		2015		2014
Interest rate swap agreements	$	(57	)	$	(1,922	)	$	(2,664	)	Interest expense	$	(1,187	)	$	(1,460	)	$	(1,495	)	N/A	$	—	$	—	$	—
Foreign currency exchange contracts	(268		)	988			308			Cost of sales	11			860			108			N/A	—		—		—
Total	$	(325	)	$	(934	)	$	(2,356	)		$	(1,176	)	$	(600	)	$	(1,387	)		$	—	$	—	$	—

		Amount of Gain or (Loss) Recognized in Income on Derivative
Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	2016		2015		2014
Foreign currency exchange contracts	Cost of sales or Other	$	—	$	—	$	25
Total		$	—	$	—	$	25