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Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2015
Derivative Financial Instruments [Abstract]  
Derivative Financial Instruments
6. Derivative Financial Instruments:

 

The Company enters into foreign currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency and occasionally to manage risks related to future transactions expected to be denominated in a foreign currency. In connection with the Rochas acquisition, the purchase price of $108 million is payable in cash on the closing date and is expected to be financed entirely through a medium term loan. As the payment at closing is due in dollars and we plan to finance it with debt in euro, the Company entered into foreign currency exchange contracts to secure the exchange rate for the $108 million purchase price at $1.067 per 1 euro. This derivative has been designated and qualifies as a cash flow hedge. The Company did not have any other cash flow hedges during the three months ended March 31, 2015 and 2014. Gains and losses in derivatives not designated as hedges are included in (loss) gain on foreign currency on the accompanying income statement and were immaterial for the three months ended March 31, 2015 and 2014.

 

All derivative instruments are reported as either assets or liabilities on the balance sheet measured at fair value. The valuation of all foreign currency forward exchange contracts as of March 31, 2015 and December 31, 2014 resulted in a liability that is included in accrued expenses on the accompanying balance sheets. Generally, increases or decreases in the fair value of derivative instruments will be recognized as gains or losses in earnings in the period of change. If the derivative instrument is designated and qualifies as a cash flow hedge, the change in fair value of the derivative instrument is recorded as a separate component of shareholders' equity.

 

At March 31, 2015, we had foreign currency contracts in the form of forward exchange contracts in the amount of approximately U.S. $126.7 million, GB pounds £2.2 million and JPY ¥220.7 million which all have maturities of less than one year.