XML 22 R12.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Derivatives | 9 Months Ended
--- | ---
Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives |
6) | Derivatives
The Company entered into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments and those utilized as economic hedges. The Company operates internationally and, in the normal course of business, is exposed to fluctuations in interest rates and foreign exchange rates. These fluctuations can increase the costs of financing, investing and operating the business. The Company has used derivative instruments, such as forward contracts and foreign currency option contracts, to manage certain foreign currency exposure. By nature, all financial instruments involve market and credit risks. The Company enters into derivative instruments with major investment grade financial institutions, for which no collateral is required. The Company has policies to monitor the credit risk of these counterparties. While there can be no assurance, the Company does not anticipate any material non-performance by any of these counterparties. Interest Rate Swap Agreement On September 30, 2016, the Company entered into an interest rate swap agreement to fix the rate on approximately 50% of its remaining outstanding term loan balance, as described further in Note 11. This cash flow hedge fixes the interest rate paid on the hedged debt at 1.198% per annum plus the credit spread of 3.50% through September 30, 2020. The interest rate swap will be recorded at fair value on the balance sheet and changes in the fair value will be recognized in other comprehensive income (loss) (“OCI”). To the extent that this arrangement is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded currently in earnings in the period it occurs. The notional amount of this transaction was $335,000 at September 30, 2016. Foreign Exchange Contracts The Company hedges a portion of its forecasted foreign currency-denominated intercompany sales of inventory, over a maximum period of eighteen months, using forward foreign exchange contracts accounted for as cash-flow hedges related to Japanese, South Korean, British, Euro and Taiwanese currencies. To the extent these derivatives are effective in off-setting the variability of the hedged cash flows, and otherwise meet the hedge accounting criteria, changes in the derivatives’ fair value are not included in current earnings but are included in OCI in stockholders’ equity. These changes in fair value will subsequently be reclassified into earnings, as applicable, when the forecasted transaction occurs. To the extent that a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship will be recorded currently in earnings in the period in which it occurs. The cash flows resulting from forward exchange contracts are classified in the consolidated statements of cash flows as part of cash flows from operating activities. The Company does not enter into derivative instruments for trading or speculative purposes. The Company also enters into forward exchange contracts to hedge certain balance sheet amounts and foreign currency option contracts related to the Israeli Shekel. To the extent the hedge accounting criteria is not met, the related foreign currency forward contracts and foreign currency option contracts are considered as economic hedges and changes in the fair value of these contracts are recorded immediately in earnings in the period in which they occur. These include hedges that are used to reduce exchange rate risks arising from the change in fair value of certain foreign currency-denominated assets and liabilities (i.e., payables, receivables) and other economic hedges where the hedge accounting criteria were not met. As of September 30, 2016 and December 31, 2015, the Company had outstanding forward foreign exchange contracts with gross notional values of $41,471 and $89,989, respectively. The following tables provide a summary of the primary net hedging positions and corresponding fair values held as of September 30, 2016 and December 31, 2015:
|  | September 30, 2016 |
Currency Hedged (Buy/Sell) |  | Gross Notional Value |  |  | Fair Value(1) (Liability)/Asset |
U.S. Dollar/Japanese Yen |  | $ | 13,213 |  |  | $ | (1,876 | )
U.S. Dollar/South Korean Won |  |  | 18,150 |  |  |  | (930 | )
U.S. Dollar/Euro |  |  | 3,969 |  |  |  | (14 | )
U.S. Dollar/U.K. Pound Sterling |  |  | 1,461 |  |  |  | 207 |
U.S. Dollar/Taiwan Dollar |  |  | 4,678 |  |  |  | (167 | )
Total |  | $ | 41,471 |  |  | $ | (2,780 | )
(1) | Represents the fair value of the net (liability) asset amount included in the condensed consolidated balance sheet.
|  | December 31, 2015 |
Currency Hedged (Buy/Sell) |  | Gross Notional Value |  |  | Fair Value(1) (Liability)/Asset |
U.S. Dollar/Japanese Yen |  | $ | 26,848 |  |  | $ | (136 | )
U.S. Dollar/South Korean Won |  |  | 34,777 |  |  |  | 915 |
U.S. Dollar/Euro |  |  | 10,987 |  |  |  | 19 |
U.S. Dollar/U.K. Pound Sterling |  |  | 4,587 |  |  |  | 61 |
U.S. Dollar/Taiwan Dollar |  |  | 12,790 |  |  |  | 364 |
Total |  | $ | 89,989 |  |  | $ | 1,223 |
(1) | Represents the fair value of the net asset (liability) amount included in the condensed consolidated balance sheet.
The following table provides a summary of the fair value amounts of the Company’s derivative instruments:
|  | September 30, 2016 |  |  | December 31, 2015 |
Derivative assets: |  |  |  |  |  |  |  |
Forward exchange contracts |  | $ | 250 |  |  | $ | 1,486 |
Foreign currency option contracts |  |  | 72 |  |  |  | — |
Derivative liabilities: |  |  |  |  |  |  |  |
Forward exchange contracts |  |  | (3,030 | ) |  |  | (263 | )
Foreign currency option contracts |  |  | (17 | ) |  |  | — |
Total net derivative (liabilities) assets(1) |  | $ | (2,725 | ) |  | $ | 1,223 |
(1) | The derivative asset of $322 and derivative liability of $3,047 are classified in other current assets and other current liabilities, respectively, in the condensed consolidated balance sheet as of September 30, 2016. The derivative asset of $1,486 and derivative liability of $263 are classified in other current assets and other current liabilities, respectively, in the condensed consolidated balance sheet as of December 31, 2015. These foreign exchange contracts are subject to a master netting agreement with one financial institution. However, the Company has elected to record these contracts on a gross basis in the balance sheet.
The net amount of existing gains as of September 30, 2016 that the Company expects to reclassify from OCI into earnings within the next twelve months is immaterial. The following table provides a summary of the gains (losses) on derivatives designated as hedging instruments:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
Derivatives Designated as Cash Flow Hedging Instruments |  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Forward exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net gain (loss) recognized in OCI(1) |  | $ | 326 |  |  | $ | 1,148 |  |  | $ | (3,107 | ) |  | $ | (2,372 | )
Net (loss) gain reclassified from accumulated OCI into income(2) |  | $ | (764 | ) |  | $ | 857 |  |  | $ | (487 | ) |  | $ | 2,766 |
(1) | Net change in the fair value of the effective portion classified in OCI.
(2) | Effective portion classified in cost of products for the three and nine months ended September 30, 2016 and 2015. The tax effect of the gains or losses reclassified from accumulated OCI into income is immaterial.
As of September 30, 2016, the Company had outstanding foreign currency option contracts related to the Israeli Shekel with gross notional values of $(476) and a net fair value asset of $55. These instruments do not qualify for hedge accounting. The following table provides a summary of the (losses) and gains on derivatives not designated as hedging instruments:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
Derivatives Not Designated as Hedging Instruments |  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Forward exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net (loss) gain recognized in income(1) |  | $ | (339 | ) |  | $ | 116 |  |  | $ | (1,283 | ) |  | $ | 1,331 |
Foreign currency option contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net (loss) gain recognized in income(1) |  | $ | (63 | ) |  | $ | — |  |  | $ | 52 |  |  | $ | — |
(1) | The Company enters into foreign exchange contracts to hedge against changes in the balance sheet for certain subsidiaries and also enters into foreign currency option contracts to mitigate the risk associated with certain foreign currency transactions in the ordinary course of business. These derivatives are not designated as hedging instruments and gains or losses from these derivatives are recorded immediately in selling, general and administrative expenses.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 2: 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=64837297&loc=SL5624171-113959 Reference 3: 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=64837297&loc=d3e41620-113959 Reference 4: 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=64837297&loc=SL5624163-113959 Reference 5: 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=64837297&loc=SL5579240-113959 Reference 6: 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=64837297&loc=SL5624177-113959 Reference 7: 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=35736893&loc=d3e80784-113994 Reference 8: 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=64837297&loc=d3e41641-113959 Reference 9: 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=64837297&loc=SL5579245-113959 Reference 10: 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=64837297&loc=SL5624258-113959 Reference 11: 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=35736893&loc=d3e80748-113994 Reference 12: 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=64837297&loc=SL5708775-113959 Reference 13: 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=64837297&loc=SL5708773-113959 Reference 14: 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=64837297&loc=SL5618551-113959 Reference 15: 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=64837297&loc=SL5580258-113959 Reference 16: 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=64837297&loc=SL5624181-113959 Reference 17: 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 18: 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=64837297&loc=d3e41638-113959 Reference 19: 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 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration