Financial Instruments

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

Financial Instruments

The Company’s financial instruments include cash and marketable securities. Due to the short-term nature of these instruments, their book value approximates their fair value. The Company’s financial instruments also include long-term debt, interest rate and cross-currency swaps, commodity derivative contracts and foreign currency derivatives. All derivative contracts are placed with counterparties that have an S&P, or equivalent, investment grade credit rating at the time of the contracts’ placement. At September 30, 2012, the Company had no derivative contracts that contained credit risk related contingent features.

The Company selectively uses cross-currency swaps to hedge the foreign currency exposure associated with our net investment in certain foreign operations (net investment hedges). At September 30, 2012 and December 31, 2011, the following cross-currency swaps were outstanding:

	Cross-currency swaps
(in millions)	Notional in USD		Notional in local currency		Duration
Floating $ to floating €	$	75.0	€	58.5	Oct - 19
Floating $ to floating ¥	$	150.0	¥	17,581.5	Nov - 16

The Company uses certain commodity derivative contracts to protect against commodity price changes related to forecasted raw material and supplies purchases. The Company primarily utilizes forward and option contracts, which are designated as cash flow hedges. At September 30, 2012 and December 31, 2011, the following commodity derivative contracts were outstanding:

	Commodity derivative contracts
Commodity	Volume hedged September 30, 2012	Volume hedged December 31, 2011	Units of measure	Duration
Natural gas	113,406	—	MMBtu	Dec - 12

The Company uses foreign currency forward and option contracts to protect against exchange rate movements for forecasted cash flows, including capital expenditures, purchases, operating expenses or sales transactions designated in currencies other than the functional currency of the operating unit. Foreign currency derivative contracts require the Company, at a future date, to either buy or sell foreign currency in exchange for the operating units’ local currency.

As of September 30, 2012 and December 31, 2011, the following foreign currency derivative contracts were outstanding:

Foreign currency derivatives (in millions)
Functional currency	Traded currency	Notional in traded currency September 30, 2012	Notional in traded currency December 31, 2011	Duration
British pound	Euro	37.8	64.8	Dec - 13
Euro	British pound	1.9	7.0	Dec - 12
Euro	Hungarian forint	10,650.0	5,400.0	Nov - 13
Euro	Japanese Yen	829.6	—	Dec - 13
Euro	Polish zloty	29.8	24.5	Dec - 12
Euro	US dollar	12.5	16.1	Dec - 13
Japanese yen	US dollar	2.0	7.4	Dec - 12
Korean won	Euro	38.0	34.5	Dec - 14
Korean won	US dollar	3.6	2.4	Dec - 12
Mexican peso	Euro	3.7	9.2	Dec - 12
Mexican peso	US dollar	28.0	40.7	Dec - 13
Swedish Krona	Euro	2.1	6.1	Dec - 12
US dollar	Euro	1.2	3.0	Dec - 12
US dollar	Indian Rupee	174.5	—	Dec - 13
US dollar	Japanese yen	3,000.0	3,000.0	Dec - 12

At September 30, 2012 and December 31, 2011, the following amounts were recorded in the Condensed Consolidated Balance Sheets as being payable to or receivable from counterparties under ASC Topic 815:

	Assets					Liabilities
(millions of dollars)	Location	September 30, 2012		December 31, 2011		Location	September 30, 2012		December 31, 2011
Foreign currency contracts	Prepayments and other current assets	$	6.9	$	2.6	Accounts payable and accrued expenses	$	0.4	$	2.4
	Other non-current assets	$	1.2	$	0.1	Other non-current liabilities	$	0.1	$	0.5
Commodity contracts	Prepayments and other current assets	$	—	$	—	Accounts payable and accrued expenses	$	—	$	—
Net investment hedge contracts	Other non-current assets	$	—	$	—	Other non-current liabilities	$	79.7	$	85.0

Effectiveness for cash flow and net investment hedges is assessed at the inception of the hedging relationship and quarterly, thereafter. To the extent that derivative instruments are deemed to be effective as defined by ASC Topic 815, gains and losses arising from these contracts are deferred in accumulated other comprehensive income (loss) ("AOCI"). Such gains and losses will be reclassified into income as the underlying operating transactions are realized. Gains and losses not qualifying for deferral treatment have been credited/charged to income as they are recognized.

The table below shows deferred gains and losses at the end of the period reported in AOCI and amounts expected to be reclassified to income within one year or less. The gain or loss expected to be reclassified to income in one year or less assumes no change in the current relationship of the hedged item at September 30, 2012 market rates.

(millions of dollars)	Deferred gain (loss) in AOCI at						Gain (loss) expected to be reclassified to income in one year or less
Contract Type	September 30, 2012			December 31, 2011
Foreign currency	$	6.3		$	(0.6	)	$	5.2
Commodity	—			—			—
Net investment hedges	(75.4		)	(78.9		)	—
Total	$	(69.1	)	$	(79.5	)	$	5.2

Net investment hedges are derivative contracts entered into to hedge against exchange rate movements that affect the overall value of net investments in foreign entities. Gains and losses on net investment hedges are recorded in AOCI and are used to offset equivalent gains or losses in the value of net investments that are recorded in translation gains and losses which is also a component of AOCI. Net investment hedges, designated under ASC Topic 815, held during the period resulted in the following gains or losses recorded in income:

		Gain (loss) reclassified from AOCI to income (effective portion)					Gain (loss) recognized in income (ineffective portion)
(millions of dollars)		Three Months Ended					Three Months Ended
Contract Type	Location	September 30, 2012		September 30, 2011		Location	September 30, 2012		September 30, 2011
Cross-currency swap	Interest expense	$	—	$	—	Interest expense	$	3.9	$	0.3

		Gain (loss) reclassified from AOCI to income (effective portion)					Gain (loss) recognized in income (ineffective portion)
(millions of dollars)		Nine Months Ended					Nine Months Ended
Contract Type	Location	September 30, 2012		September 30, 2011		Location	September 30, 2012		September 30, 2011
Cross-currency swap	Interest expense	$	—	$	—	Interest expense	$	1.7	$	2.1

Cash flow hedges are derivative contracts entered into to hedge against fluctuations in foreign exchange rates and commodity prices. The effective portion of gains or losses exactly offsets gains or losses in the underlying transactions that they were designated to hedge, and are recorded on the same line in the statement of operations. Ineffectiveness resulting from imperfect matches between changes in value of hedge contracts and changes in value of the underlying transactions are immediately recognized in income. Cash flow hedges, designated under ASC Topic 815, held during the period resulted in the following gains and losses recorded in income:

		Gain (loss) reclassified from AOCI to income (effective portion)						Gain (loss) recognized in income (ineffective portion)
(millions of dollars)		Three Months Ended						Three Months Ended
Contract Type	Location	September 30, 2012		September 30, 2011			Location	September 30, 2012		September 30, 2011
Foreign currency	Sales	$	2.4	$	(0.8	)	SG&A expense	$	—	$	—
Foreign currency	Cost of goods sold	1.4		(0.1		)	SG&A expense	—		—
Foreign currency	SG&A expense	—		0.4			SG&A expense	—		—
Commodity	Cost of goods sold	—		(0.1		)	Cost of goods sold	—		—

		Gain (loss) reclassified from AOCI to income (effective portion)						Gain (loss) recognized in income (ineffective portion)
(millions of dollars)		Nine Months Ended						Nine Months Ended
Contract Type	Location	September 30, 2012		September 30, 2011			Location	September 30, 2012		September 30, 2011
Foreign currency	Sales	$	3.9	$	(1.6	)	SG&A expense	$	—	$	—
Foreign currency	Cost of goods sold	2.5		(0.7		)	SG&A expense	—		—
Foreign currency	SG&A expense	—		1.0			SG&A expense	—		—
Commodity	Cost of goods sold	—		(0.1		)	Cost of goods sold	—		—

At September 30, 2012, derivative instruments that were not designated as hedging instruments as defined by ASC Topic 815 were immaterial.