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DERIVATIVES | 9 Months Ended
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Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES | DERIVATIVES The Company uses derivatives to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial in the nine months ended September 30, 2016 and 2015. The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at September 30, 2016. The Company does not expect any counterparties to fail to meet their obligations. Cash Flow Hedges Certain foreign currency forward contracts were qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $42,501 at September 30, 2016 and $30,388 at December 31, 2015. Fair Value Hedges Certain interest rate swap agreements were qualified and designated as fair value hedges. The interest rate swap agreements designated as fair value hedges meet the shortcut method requirements under accounting standards for derivatives and hedging. Accordingly, changes in the fair value of these agreements are considered to exactly offset changes in the fair value of the underlying long-term debt. The effective portion of the changes in fair value are recorded in Non-current assets or Other long-term liabilities with offsetting amounts recorded as a fair value adjustment to the carrying value of Long-term debt, less current portion. At September 30, 2016, the Company had interest rate swap agreements outstanding that effectively convert notional amounts of $25,000 of debt from a fixed interest rate to a variable interest rate based on three-month LIBOR plus a spread. Net Investment Hedges The Company has foreign currency forward contracts that were qualified and designated as net investment hedges. No such contracts were outstanding at September 30, 2016 and December 31, 2015. Derivatives Not Designated as Hedging Instruments The Company has certain foreign exchange forward contracts that are not designated as hedges. These derivatives are held as economic hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $285,826 at September 30, 2016 and $267,626 at December 31, 2015. The Company had short-term silver forward contracts with notional amounts of $2,804 at December 31, 2015. Fair values of derivative instruments in the Company’s Consolidated Balance Sheets follow:
|  | September 30, 2016 |  | December 31, 2015
Derivatives by hedge designation |  | Other Current Assets |  | Other Current Liabilities |  | Other Long-Term Liabilities |  | Other Current Assets |  | Other Current Liabilities
Designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | 199 |  |  | $ | 670 |  |  | $ | — |  |  | $ | 178 |  |  | $ | 731 |
Interest rate swap agreements |  | — |  |  | — |  |  | 165 |  |  | — |  |  | — |
Not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | 941 |  |  | 553 |  |  | — |  |  | 625 |  |  | 2,303 |
Commodity contracts |  | — |  |  | — |  |  | — |  |  | 40 |  |  | 8 |
Total derivatives |  | $ | 1,140 |  |  | $ | 1,223 |  |  | $ | 165 |  |  | $ | 843 |  |  | $ | 3,042 |
The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 consisted of the following:
|  |  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Derivatives by hedge designation |  | Classification of gain (loss) |  | 2016 |  | 2015 |  | 2016 |  | 2015
Not designated as hedges: |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Selling, general & administrative expenses |  | $ | (2,952 | ) |  | $ | (7,993 | ) |  | $ | (9,862 | ) |  | $ | (15,085 | )
Commodity contracts |  | Cost of goods sold |  | — |  |  | 182 |  |  | (742 | ) |  | 232 |
The effects of designated hedges on AOCI and the Company’s Consolidated Statements of Operations consisted of the following:
Total gain (loss) recognized in AOCI, net of tax |  | September 30, 2016 |  | December 31, 2015
Foreign exchange contracts |  | $ | (535 | ) |  | $ | (551 | )
Net investment contracts |  | 1,099 |  |  | 1,099 |
The Company expects a loss of $535 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized.
|  |  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Derivative type |  | Gain (loss) reclassified from AOCI to: |  | 2016 |  | 2015 |  | 2016 |  | 2015
Foreign exchange contracts |  | Sales |  | $ | (174 | ) |  | $ | (279 | ) |  | $ | (1,113 | ) |  | $ | (800 | )
|  | Cost of goods sold |  | (171 | ) |  | 120 |  |  | (401 | ) |  | 733 |

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