XML 63 R15.htm IDEA: XBRL DOCUMENT
v3.19.3

Derivatives | 9 Months Ended
--- | ---
Sep. 30, 2019
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 foreign currency exchange 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 Agreements On September 30, 2016, the Company entered into an interest rate swap agreement to fix the rate on approximately 50 % of its then-outstanding balance under the 2016 Term Loan Facility, as described further in Note 11. This hedge fixes the interest rate paid on the hedged debt at 1.198 % per annum plus the applicable credit spread, which was 1.75 % as of September 30, 2019, through September 30, 2020 . At September 30, 2019, the notional amount of this transaction was $ 250,000 and it had a fair value asset of $ 1,180 . At December 31, 2018, the notional amount of this transaction was $ 290,000 and it had a fair value asset of $ 6,083 . On April 3, 2019, the Company entered into an interest rate swap agreement, which has a maturity date of March 31, 2023, to fix the rate on $300,000 of the then-outstanding balance of the 2019 Incremental Term Loan Facility, as described further in Note 11. The rate wa s fixed at 2.309% per annum plus the applicable credit spread, which was 1.75% at September 30, 2019. At September 30, 2019, the notional amount of this transaction was $300,000 and it had a fair value liability of $8,088. The interest rate swaps are recorded at fair value on the balance sheet and changes in the fair value are recognized in other comprehensive income (loss) (“OCI”). To the extent that these arrangements are no longer an effective hedge, any ineffectiveness measured in the hedging relationships is recorded currently in earnings in the period it occurs. 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 is recorded currently in earnings in the period 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 September 30, 2019 and December 31, 2018, the Company had outstanding forward foreign exchange contracts with gross notional values of $142,789 and $159,394, respectively. The following tables provide a summary of the primary net hedging positions and corresponding fair values held as of September 30, 2019 and December 31, 2018:
|  | September 30, 2019 |
Currency Hedged (Buy/Sell) |  | Gross Notional Value |  |  | Fair Value (1) |
U.S. Dollar/Japanese Yen |  | $ | 43,339 |  |  | $ | (83 | )
U.S. Dollar/South Korean Won |  |  | 42,082 |  |  |  | 2,191 |
U.S. Dollar/Euro |  |  | 31,689 |  |  |  | 1,326 |
U.S. Dollar/U.K. Pound Sterling |  |  | 7,320 |  |  |  | 382 |
U.S. Dollar/Taiwan Dollar |  |  | 18,359 |  |  |  | 108 |
Total |  | $ | 142,789 |  |  | $ | 3,924 |
|  | 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 |
(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:
|  | September 30, 2019 |  |  | December 31, 2018 |
Derivative assets: |  |  |  |  |  |  |  |
Foreign exchange contracts (1) |  | $ | 4,232 |  |  | $ | 2,485 |
Interest rate hedge (2) |  |  | — |  |  |  | 6,083 |
Derivative liabilities: |  |  |  |  |  |  |  |
Foreign exchange contracts (1) |  |  | (308 | ) |  |  | (1,168 | )
Interest rate hedge (2) |  |  | (6,908 | ) |  |  | — |
Total net derivative (liability) asset designated as hedging instruments |  | $ | (2,984 | ) |  | $ | 7,400 |
(1) | The derivative assets of $4,232 and $2,485 as of September 30, 2019 and December 31, 2018, respectively, related to foreign exchange contracts and are classified in other current assets in the consolidated balance sheet. The derivative liabilities of $308 and $1,168 as of September 30, 2019 and December 31, 2018, respectively, are classified in other current liabilities in the consolidated balance sheet. 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.
(2) | The interest rate hedge liability of $ 6,908 as of September 30, 2019 is classified in other liabilities in the consolidated balance sheet. The interest rate hedge asset of $ 6,083 as of December 31, 2018 is classified in other assets in the consolidated balance sheet
The net amount of existing gains as of September 30, 2019 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 cash flow hedging instruments:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
Derivatives Designated as Cash Flow Hedging Instruments |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Forward exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net gain (loss) recognized in OCI (1) |  | $ | (1,024 | ) |  | $ | 212 |  |  | $ | (11,189 | ) |  | $ | 10,357 |
Net gain (loss) reclassified from accumulated OCI into income (2) |  | $ | 2,000 |  |  | $ | 306 |  |  | $ | 4,077 |  |  | $ | (4,882 | )
(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, 2019 and 2018. The tax effect of the gains or losses reclassified from accumulated OCI into income is immaterial.
The following table provides a summary of the gain (loss) on derivatives not designated as hedging instruments:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
Derivatives Not Designated as Hedging Instruments |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Forward exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net gain (loss) recognized in income (1) |  | $ | 82 |  |  | $ | (111 | ) |  | $ | (166 | ) |  | $ | 12 |
(1) | The Company enters into 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 hedging instruments and gains or losses from these derivatives are recorded immediately in other (expense) income.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration