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 in the three months ended March 31, 2017 and 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 March 31, 2017. 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 $41,398 at March 31, 2017 and $36,385 at December 31, 2016.

Fair Value Hedges

Certain interest rate swap agreements were qualified and designated as fair value hedges. At March 31, 2017, 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 foreign currency forward contracts that were qualified and designated as net investment hedges. No such contracts were outstanding at March 31, 2017 and December 31, 2016.

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 $260,832 at March 31, 2017 and $261,168 at December 31, 2016.

Fair values of derivative instruments in the Company’s Consolidated Balance Sheets follow:



	March 31, 2017						December 31, 2016
Derivatives by hedge designation	Other Current Assets		Other Current Liabilities		Other Liabilities		Other Current Assets		Other Current Liabilities		Other Liabilities
Designated as hedging instruments:
Foreign exchange contracts	$	1,566	$	72	$	—	$	439	$	923	$	—
Interest rate swap agreements	—		—		5,813		—		—		5,439
Not designated as hedging instruments:
Foreign exchange contracts	1,266		1,064		—		746		1,529		—
Total derivatives	$	2,832	$	1,136	$	5,813	$	1,185	$	2,452	$	5,439

The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016 consisted of the following:



		Three Months Ended March 31,
Derivatives by hedge designation	Classification of gain (loss)	2017		2016
Not designated as hedges:
Foreign exchange contracts	Selling, general & administrative expenses	$	13,702	$	3,597
Commodity contracts	Cost of goods sold	—		(369		)

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	March 31, 2017		December 31, 2016
Foreign exchange contracts	$	1,012	$	(512	)
Net investment contracts	1,099		1,099

The Company expects a gain of $1,012 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 March 31,
Derivative type	Gain (loss) reclassified from AOCI to:	2017			2016
Foreign exchange contracts	Sales	$	(185	)	$	(787	)
	Cost of goods sold	166			(76		)