XML 23 R13.htm IDEA: XBRL DOCUMENT
v3.21.1

Derivatives | 3 Months Ended
--- | ---
Mar. 31, 2021
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivatives |
6) | 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 foreign exchange 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. Foreign Exchange Forward Contracts The Company hedges a portion of its forecasted foreign currency-denominated intercompany sales of inventory, over a maximum period of eighteen months, using foreign exchange forward contracts accounted for as cash-flow hedges related to British, Euro, Japanese, South Korean 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 other comprehensive income (“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 in earnings in the period it occurs. The cash flows resulting from forward exchange contracts are classified in the condensed 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 March 31, 2021 and December 31, 2020, the Company had outstanding foreign exchange forward contracts with gross notional values of $169.3 and $176.2, respectively. The following tables provide a summary of the primary net hedging positions and corresponding fair values held as of March 31, 2021 and December 31, 2020:
|  | March 31, 2021 |
Currency Hedged (Buy/Sell) |  | Gross Notional Value |  |  | Fair Value (1) |
U.S. dollar/Japanese yen |  | $ | 58.7 |  |  | $ | 1.6 |
U.S. dollar/South Korean won |  |  | 58.2 |  |  |  | (0.8 | )
U.S. dollar/euro |  |  | 12.8 |  |  |  | (0.1 | )
U.S. dollar/U.K. pound sterling |  |  | 6.5 |  |  |  | (0.2 | )
U.S. dollar/Taiwan dollar |  |  | 33.1 |  |  |  | (0.2 | )
Total |  | $ | 169.3 |  |  | $ | 0.3 |
|  | December 31, 2020 |
Currency Hedged (Buy/Sell) |  | Gross Notional Value |  |  | Fair Value (1) |
U.S. dollar/Japanese yen |  | $ | 61.5 |  |  | $ | (1.1 | )
U.S. dollar/South Korean won |  |  | 62.2 |  |  |  | (3.1 | )
U.S. dollar/euro |  |  | 13.1 |  |  |  | (0.6 | )
U.S. dollar/U.K. pound sterling |  |  | 6.1 |  |  |  | (0.3 | )
U.S. dollar/Taiwan dollar |  |  | 33.3 |  |  |  | (1.4 | )
Total |  | $ | 176.2 |  |  | $ | (6.5 | )
| (1) | Represents receivable (payable) amount included in the condensed consolidated balance sheet.
Interest Rate Swap Agreements The Company entered into various interest rate swap agreements that exchange the variable LIBOR interest rate to a fixed rate in order to manage the exposure to interest rate fluctuations associated with the variable LIBOR interest rate paid on the outstanding balance of the 2019 Incremental Term Loan Facility, as described further in Note 10. The table below summarizes the various interest rate hedges entered into by the Company:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | March 31, 2021 |  |  | March 31, 2021 |  |  | December 31, 2020 |
Swap |  | Trade Date |  | Effective Date |  | Maturity |  | Fixed Rate |  |  | Notional Amount at Effective Date |  |  | Notional Amount |  |  | Fair Value Asset (Liability) |  |  | Fair Value Asset (Liability) |
1 |  | April 3, 2019 |  | April 5, 2019 |  | March 31, 2023 |  |  | 2.309 | % |  | $ | 300.0 |  |  | $ | 300.0 |  |  |  | (10.6 | ) |  |  | (12.4 | )
2 |  | October 29, 2020 |  | October 26, 2021 |  | February 28, 2025 |  |  | 0.485 | % |  | $ | 200.0 |  |  | $ | — |  |  |  | 3.1 |  |  |  | (0.7 | )
3 |  | October 29, 2020 |  | March 31, 2022 |  | February 28, 2025 |  |  | 0.623 | % |  | $ | 100.0 |  |  | $ | — |  |  |  | 2.0 |  |  |  | (0.9 | )
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  | $ | (5.5 | ) |  | $ | (14.0 | )
The interest rate swaps are recorded at fair value on the balance sheet and changes in the fair value are recognized in OCI. To the extent that these arrangements are no longer effective hedges, any ineffectiveness measured in the hedging relationships is recorded immediately in earnings in the period it occurs. The following table provides a summary of the fair value amounts of the Company’s derivative instruments:
Derivatives Designated as Hedging Instruments |  | March 31, 2021 |  |  | December 31, 2020 |
Derivative assets: |  |  |  |  |  |  |  |
Foreign exchange forward contracts(1) |  | $ | 2.2 |  |  | $ | — |
Interest rate hedge(2) |  |  | 5.1 |  |  |  | — |
Derivative liabilities: |  |  |  |  |  |  |  |
Foreign exchange forward contracts(1) |  |  | (1.9 | ) |  |  | (6.5 | )
Interest rate hedge(2) |  |  | (10.6 | ) |  |  | (14.0 | )
Total net derivative liability designated as hedging instruments |  | $ | (5.2 | ) |  | $ | (20.5 | )
| (1) | The derivative asset of $2.2 and derivative liability of $1.9 related to the foreign exchange forward contracts are classified in other current assets and other current liabilities in the condensed consolidated balance sheet as of March 31, 2021. The derivative liability of $6.5 related to the foreign exchange forward contracts is classified in other current liabilities in the condensed consolidated balance sheet as of December 31, 2020. These foreign exchange forward 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 asset of $5.1 is classified in other non-current assets in the condensed consolidated balance sheet as of March 31, 2021. The interest rate hedge liabilities of $10.6 and $14.0 are classified in other non-current liabilities in the condensed consolidated balance sheet as of March 31, 2021 and December 31, 2020, respectively.
The net amount of existing gains as of March 31, 2021 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:
|  | Three Months Ended March 31, |
Derivatives Designated as Cash Flow Hedging Instruments |  | 2021 |  |  | 2020 |
Foreign exchange forward contracts: |  |  |  |  |  |  |  |
Net gain (loss) recognized in accumulated OCI(1) |  | $ | 11.0 |  |  | $ | (6.0 | )
Net (loss) gain reclassified from accumulated OCI into income(2) |  | $ | (1.5 | ) |  | $ | 0.7 |
| (1) | Net change in the fair value of the effective portion classified in accumulated OCI.
| (2) | Effective portion classified in cost of products for the three months ended March 31, 2021 and 2020. The tax effect of the gains or losses reclassified from accumulated OCI into income is immaterial.
The following table provides a summary of the (loss) gain on derivatives not designated as cash flow hedging instruments:
|  | Three Months Ended March 31, |
Derivatives Not Designated as Cash Flow Hedging Instruments |  | 2021 |  |  | 2020 |
Foreign exchange forward contracts: |  |  |  |  |  |  |  |
Net (loss) gain recognized in income(1) |  | $ | (0.8 | ) |  | $ | 0.2 |
| (1) | The Company enters into foreign exchange forward 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 in other (expense) income in the periods in which they occur.

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