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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended
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Sep. 30, 2014
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 7 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company maintains a foreign exchange risk management policy designed to establish a framework to protect the value of the Company’s non-functional denominated transactions from adverse changes in exchange rates. Sales of the Company’s products can be denominated in a currency different from the currency in which the related costs to produce the product are denominated. Changes in exchange rates on such inter-country sales or intercompany loans can impact the Company’s results of operations. The Company’s policy is not to engage in speculative foreign currency hedging activities, but to minimize our net foreign currency transaction exposure, defined as firm commitments and transactions recorded and denominated in currencies other than the functional currency. The Company may use foreign currency forward exchange contracts, options and cross currency swaps to economically hedge these risks. The Company maintains an interest rate risk management strategy to minimize significant, unanticipated earnings fluctuations that may arise from volatility in interest rates. For derivative instruments designated as hedges, the Company formally documents the nature and relationships between the hedging instruments and the hedged items, as well as the risk management objectives, strategies for undertaking the various hedge transactions, and the method of assessing hedge effectiveness. Additionally, in order to designate any derivative instrument as a hedge of an anticipated transaction, the significant characteristics and expected terms of any anticipated transaction must be specifically identified, and it must be probable that the anticipated transaction will occur. HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS A significant number of the Company’s operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of the Company’s foreign subsidiaries. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on the Company’s financial condition and results of operations. Conversely, a weakening U.S. dollar has an additive effect. The Company in some cases maintains debt in these subsidiaries to offset the net asset exposure. The Company does not otherwise actively manage this risk using derivative financial instruments. In the event the Company plans on a full or partial liquidation of any of our foreign subsidiaries where the Company’s net investment is likely to be monetized, the Company will consider hedging the currency exposure associated with such a transaction. OTHER As of September 30, 2014, the Company has recorded the fair value of foreign currency forward exchange contracts of $0.8 million in prepaid and other, $0.1 million in miscellaneous other assets, $3.0 million in accounts payable and accrued liabilities, and $0.3 million in deferred and other non-current liabilities in the balance sheet. All forward exchange contracts outstanding as of September 30, 2014 had an aggregate contract amount of $155 million. Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013
Derivative Contracts Not Designated as Hedging Instruments |  | Balance Sheet Location |  | September 30, 2014 |  | December 31, 2013 |
Derivative Assets |  |  |  |  |  |  |
Foreign Exchange Contracts |  | Prepaid and other |  | $ | 801 |  | $ | 3,003 |
Foreign Exchange Contracts |  | Miscellaneous Other Assets |  | 62 |  | 985 |
|  |  |  | $ | 863 |  | $ | 3,988 |
Derivative Liabilities |  |  |  |  |  |  |
Foreign Exchange Contracts |  | Accounts payable and accrued liabilities |  | $ | 3,044 |  | $ | 522 |
Foreign Exchange Contracts |  | Deferred and other non-current liabilities |  | 345 |  | 110 |
|  |  |  | $ | 3,389 |  | $ | 632 |
The Effect of Derivative Instruments on the Condensed Consolidated Statements of Income for the Quarters Ended September 30, 2014 and September 30, 2013
Derivatives Not Designated as Hedging Instruments |  | Location of (Loss) or Gain Recognized in Income on Derivative |  | Amount of (Loss) or Gain Recognized in Income on Derivative |
|  |  |  | 2014 |  | 2013 |
Foreign Exchange Contracts |  | Other Income (Expense) Miscellaneous, net |  | $ | (1,965 | ) | $ | 2,894 |
|  |  |  | $ | (1,965 | ) | $ | 2,894 |
The Effect of Derivative Instruments on the Condensed Consolidated Statements of Income for the Nine Months Ended September 30, 2014 and September 30, 2013
Derivatives Not Designated as Hedging Instruments |  | Location of (Loss) or Gain Recognized in Income on Derivative |  | Amount of (Loss) or Gain Recognized in Income on Derivative |
|  |  |  | 2014 |  | 2013 |
Foreign Exchange Contracts |  | Other Income (Expense) Miscellaneous, net |  | $ | (3,459 | ) | $ | 2,851 |
|  |  |  | $ | (3,459 | ) | $ | 2,851 |
|  |  |  |  |  | Net Amounts |  | Gross Amounts not Offset in the |  |  |
|  |  |  | Gross Amounts |  | Presented in |  | Statement of Financial Position |  |  |
|  | Gross |  | Offset in the |  | the Statement of |  | Financial |  | Cash Collateral |  | Net |
|  | Amount |  | Financial Position |  | Financial Position |  | Instruments |  | Received |  | Amount |
Description |  |  |  |  |  |  |  |  |  |  |  |  |
September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative Assets |  | $ | 863 |  | -- |  | $ | 863 |  | -- |  | -- |  | $ | 863 |
Total Assets |  | $ | 863 |  | -- |  | $ | 863 |  | -- |  | -- |  | $ | 863 |
Derivative Liabilities |  | $ | 3,389 |  | -- |  | $ | 3,389 |  | -- |  | -- |  | $ | 3,389 |
Total Liabilities |  | $ | 3,389 |  | -- |  | $ | 3,389 |  | -- |  | -- |  | $ | 3,389 |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative Assets |  | $ | 3,988 |  | -- |  | $ | 3,988 |  | -- |  | -- |  | $ | 3,988 |
Total Assets |  | $ | 3,988 |  | -- |  | $ | 3,988 |  | -- |  | -- |  | $ | 3,988 |
Derivative Liabilities |  | $ | 632 |  | -- |  | $ | 632 |  | -- |  | -- |  | $ | 632 |
Total Liabilities |  | $ | 632 |  | -- |  | $ | 632 |  | -- |  | -- |  | $ | 632 |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80748-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41635-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708775-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5618551-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624258-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624163-113959 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624181-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708773-113959 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80784-113994 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41620-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624177-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579245-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5580258-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579240-113959 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41641-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959 Reference 20: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624171-113959 + Details
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