DERIVATIVES

The Company uses derivative instruments 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 for each of the three years in the period ended December 31, 2016.

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 December 31, 2016. The Company does not expect any counterparties to fail to meet their obligations.

Cash flow hedges

Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $36,385 at December 31, 2016 and $30,388 at December 31, 2015.

Fair value hedges

Certain interest rate swap agreements were qualified and designated as fair value hedges. At December 31, 2016, the Company had interest rate swap agreements outstanding that effectively convert notional amounts of $100,000 of debt from a fixed interest rate to a variable interest rate based on three-month LIBOR plus a spread of between 0.6% and 1.8%. The variable rates reset every three months, at which time payment or receipt of interest will be settled.

Net investment hedges

The Company had no foreign currency forward contracts that were qualified and designated as net investment hedges.

Derivatives not designated as hedging instruments

The Company has certain foreign exchange forward contracts which are not designated as hedges. These derivatives are held as hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $261,168 at December 31, 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:



	December 31, 2016						December 31, 2015
Derivatives by hedge designation	Other Current Assets		Other Current Liabilities		Other Liabilities		Other Current Assets		Other Current Liabilities
Designated as hedging instruments:
Foreign exchange contracts	$	439	$	923	$	—	$	178	$	731
Interest rate swap agreements	—		—		5,439		—		—
Not designated as hedging instruments:
Foreign exchange contracts	746		1,529		—		625		2,303
Commodity contracts	—		—		—		40		8
Total derivatives	$	1,185	$	2,452	$	5,439	$	843	$	3,042

The effects of undesignated derivative instruments on the Company's Consolidated Statements of Income for the years ended December 31, 2016 and 2015 consisted of the following:



		Year Ended December 31,
Derivatives by hedge designation	Classification of gains (losses)	2016			2015
Not designated as hedges:
Foreign exchange contracts	Selling, general & administrative expenses	$	(21,096	)	$	(18,875	)
Commodity contracts	Cost of goods sold	(742		)	440

The effects of designated cash flow hedges on AOCI and the Company's Consolidated Statements of Income for the years ended December 31, 2016 and 2015 consisted of the following:



	December 31,
Total gain (loss) recognized in AOCI, net of tax	2016			2015
Foreign exchange contracts	$	(512	)	$	(551	)
Net investment contracts	1,099			1,099

The Company expects a loss of $512 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.



		Year Ended December 31,
Derivative type	Gain (loss) reclassified from AOCI to:	2016			2015
Foreign exchange contracts	Sales	$	(1,580	)	$	(1,191	)
	Cost of goods sold	(407		)	771