Tecumseh Products 2012 Annual Report Download - page 60

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59
We assess the effectiveness of our futures and forwards contracts using the dollar offset method and de-designate the derivative
if it is determined that the derivative will no longer be highly effective at offsetting the cash flows of the hedged item. At the
time a derivative is de-designated, any losses recorded in other comprehensive income are recognized in our Consolidated
Statements of Operations while gains remain in AOCI on our Consolidated Balance Sheets until the forecasted cash flows
occur. All subsequent gains and losses related to the de-designated derivatives are recognized in our Consolidated Statements of
Operations.
The notional amount outstanding of derivative contracts designated as cash flow hedges was $50.9 million and $170.8 million
at December 31, 2012 and 2011, respectively. The notional amount outstanding of de-designated derivative contracts was $20.4
million at December 31, 2012. We had no de-designated derivative contracts at December 31, 2011.
We recognized $0.3 million of losses associated with the derivative contracts that have been de-designated during the year
ended December 31, 2012. We had gains of $0.2 million in “Other comprehensive income” at December 31, 2012, for
derivative contracts that have been de-designated. These gains will be recognized as the forecasted cash flows occur.
The following table presents the fair value of our derivatives designated as hedging instruments in our Consolidated Balance
Sheets as of December 31, 2012 and 2011:
Asset (Liability) Derivatives
December 31, 2012 December 31, 2011
(in millions)
Financial
Position Location Fair Value
Financial
Position Location Fair Value
Commodity futures contracts..................... Fair value of derivative
asset $ 0.3 Fair value of derivative
asset $ 0.2
Commodity futures contracts..................... Fair value of derivative
liability —Fair value of derivative
liability (3.5)
Foreign currency derivatives...................... Fair value of derivative
asset 0.2 Fair value of derivative
asset —
Foreign currency derivatives...................... Fair value of derivative
liability (0.7)Fair value of derivative
liability (13.1)
Total ........................................................... $(0.2)$
(16.4)
The following table presents the fair value of our derivatives that have been de-designated as hedging instruments in our
Consolidated Balance Sheets as of December 31, 2012 and 2011:
Asset (Liability) Derivatives
December 31, 2012 December 31, 2011
(in millions)
Financial
Position Location
Fair
Value
Financial
Position Location
Fair
Value
Commodity futures contracts.....................
Fair value of derivative
asset $ 0.1
Fair value of derivative
asset $ —
Commodity futures contracts.....................
Fair value of derivative
liability —
Fair value of derivative
liability —
Foreign currency derivatives......................
Fair value of derivative
asset 0.1
Fair value of derivative
asset —
Foreign currency derivatives......................
Fair value of derivative
liability (0.2)
Fair value of derivative
liability —
Total ........................................................... $ 0.0 $ —