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Derivatives | 12 Months Ended
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Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives |
7) | Derivatives
The Company enters 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, to manage certain foreign currency exposure, and interest rate swaps to manage interest rate 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 then outstanding term loan balance, as described further in Note 13. This hedge fixes the interest rate paid on the hedged debt at 1.198% per annum plus the credit spread, which was 1.75% as of December 31, 2018, 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 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 $290,000 and had a fair value of $6,083 at December 31, 2018. The notional amount of this transaction was $305,000 and had a fair value of $6,179 at December 31, 2017. 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. As of December 31, 2018 and 2017, the Company had outstanding forward foreign exchange contracts with gross notional values of $159,394 and $208,922, respectively. The following tables provide a summary of the primary net hedging positions and corresponding fair values held as of December 31, 2018 and 2017:
|  | December 31, 2018 |
Currency Hedged (Buy/Sell) |  | Gross Notional Value |  |  | Fair Value(1) |
U.S. Dollar/Japanese Yen |  | $ | 43,770 |  |  | $ | (478 | )
U.S. Dollar/South Korean Won |  |  | 59,149 |  |  |  | 570 |
U.S. Dollar/Euro |  |  | 23,515 |  |  |  | 688 |
U.S. Dollar/U.K. Pound Sterling |  |  | 11,827 |  |  |  | 323 |
U.S. Dollar/Taiwan Dollar |  |  | 21,133 |  |  |  | 214 |
Total |  | $ | 159,394 |  |  | $ | 1,317 |
|  | December 31, 2017 |
Currency Hedged (Buy/Sell) |  | Gross Notional Value |  |  | Fair Value(1) |
U.S. Dollar/Japanese Yen |  | $ | 70,175 |  |  | $ | (233 | )
U.S. Dollar/South Korean Won |  |  | 79,672 |  |  |  | (3,799 | )
U.S. Dollar/Euro |  |  | 26,140 |  |  |  | (1,047 | )
U.S. Dollar/U.K. Pound Sterling |  |  | 12,104 |  |  |  | (337 | )
U.S. Dollar/Taiwan Dollar |  |  | 20,831 |  |  |  | (614 | )
Total |  | $ | 208,922 |  |  | $ | (6,030 | )
(1) | Represents the receivable (payable) amount included in the consolidated balance sheet.
The following table provides a summary of the fair value amounts of the Company’s derivative instruments:
|  | Years Ended December 31, |
Derivatives Designated as Hedging Instruments |  | 2018 |  |  | 2017 |
Derivative assets: |  |  |  |  |  |  |  |
Forward exchange contracts(1) |  | $ | 2,485 |  |  | $ | 168 |
Foreign currency interest rate hedge(2) |  |  | 6,083 |  |  |  | 6,179 |
Derivative liabilities: |  |  |  |  |  |  |  |
Forward exchange contracts(1) |  |  | (1,168 | ) |  |  | (6,198 | )
Total net derivative asset designated as hedging instruments |  | $ | 7,400 |  |  | $ | 149 |
(1) | The derivative asset of $2,485 and derivative liability of $1,168 related to the forward foreign exchange contracts are classified in other current assets and other current liabilities in the consolidated balance sheet as of December 31, 2018. The derivative asset of $168 and derivative liability of $6,198 related to the forward foreign exchange contracts are classified in other current assets and other current liabilities in the consolidated balance sheet as of December 31, 2017. These forward 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.
(2) | The foreign currency interest rate hedge asset of $6,083 and $6,179 is classified in other assets in the consolidated balance sheet as of December 31, 2018 and 2017, respectively.
The net amount of existing gains as of December 31, 2018 that is expected to be reclassified from OCI into earnings within the next 12 months is immaterial. The following table provides a summary of the gains (losses) on derivatives designated as cash flow hedging instruments:
|  | Years Ended December 31, |
Derivatives Designated as Cash Flow Hedging Instruments |  | 2018 |  |  | 2017 |  |  | 2016 |
Forward exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |
Net gain (loss) recognized in OCI(1) |  | $ | 6,289 |  |  | $ | (6,036 | ) |  | $ | 5,914 |
Net loss reclassified from OCI into income(2) |  | $ | (3,367 | ) |  | $ | (2,685 | ) |  | $ | (1,414 | )
(1) | Net change in the fair value of the effective portion classified in OCI.
(2) | Effective portion classified as cost of products.
The following table provides a summary of losses on derivatives not designated as cash flow hedging instruments:
|  | Years Ended December 31, |
Derivatives Not Designated as Hedging Instruments |  | 2018 |  |  | 2017 |  |  | 2016 |
Forward exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |
Net gain (loss) recognized in income (1) |  | $ | 105 |  |  | $ | (3,416 | ) |  | $ | (31 | )
(1) | The Company enters into forward foreign exchange contracts to hedge against changes in the balance sheet for certain subsidiaries to mitigate the risk associated with certain foreign currency transactions in the ordinary course of business. These derivatives are not designated as cash flow hedging instruments and gains or losses from these derivatives are recorded immediately in other expense, net in 2018 and 2017.

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- References No definition available. + Details
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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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