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Derivatives and Hedging | 12 Months Ended
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Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging | Note 16. Derivatives and Hedging In the normal course of business, the Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to transactions of its international subsidiaries. As part of its strategy to manage the level of exposure to the risk of fluctuations in foreign currency exchange rates, the Company uses designated cash flow hedges and non-designated hedges in the form of foreign currency forward contracts to mitigate the impact of foreign currency translation on transactions that are denominated primarily in Japanese Yen, British Pounds, Euros, Canadian Dollars, Australian Dollars and Korean Won. The Company accounts for its foreign currency forward contracts in accordance with ASC Topic 815, "Derivatives and Hedging" ("ASC Topic 815"). ASC Topic 815 requires the recognition of all derivative instruments as either assets or liabilities on the balance sheet, the measurement of those instruments at fair value and the recognition of changes in the fair value of derivatives in earnings in the period of change, unless the derivative qualifies as a designated cash flow hedge that offsets certain exposures. Certain criteria must be satisfied in order for derivative financial instruments to be classified and accounted for as a cash flow hedge. Gains and losses from the remeasurement of qualifying cash flow hedges are recorded as a component of other comprehensive income and released into earnings as a component of cost of goods sold or net sales during the period in which the hedged transaction takes place. Gains and losses on the ineffective portion of hedges (hedges that do not meet accounting requirements due to ineffectiveness) and derivatives that are not elected for hedge accounting treatment are immediately recorded in earnings as a component of other income (expense). Foreign currency forward contracts are used only to meet the Company’s objectives of minimizing variability in the Company’s operating results arising from foreign exchange rate movements. The Company does not enter into foreign currency forward contracts for speculative purposes. The Company utilizes counterparties for its derivative instruments that it believes are credit-worthy at the time the transactions are entered into and the Company closely monitors the credit ratings of these counterparties. The following table summarizes the fair value of the Company's foreign currency forward contracts as well as the location of the asset and/or liability on the consolidated balance sheets at December 31, 2017 and 2016 (in thousands):
| Asset Derivatives
| December 31, 2017 |  | December 31, 2016
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivatives designated as cash flow hedging instruments: |  |  |  |  |  |  |
Foreign currency forward contracts | Other current assets |  | $ | 168 |  |  | Other current assets |  | $ | 2,660 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency forward contracts | Other current assets |  | $ | 11 |  |  | Other current assets |  | $ | 864 |
| Liability Derivatives
| December 31, 2017 |  | December 31, 2016
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivatives designated as cash flow hedging instruments: |  |  |  |  |  |  |
Foreign currency forward contracts | Accounts payable and accrued expenses |  | $ | 194 |  |  | Accounts payable and accrued expenses |  | $ | 28 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency forward contracts | Accounts payable and accrued expenses |  | $ | 45 |  |  | Accounts payable and accrued expenses |  | $ | 57 |
The Company's foreign currency forward contracts are subject to a master netting agreement with each respective counterparty bank and are therefore net settled at their maturity date. Although the Company has the legal right of offset under the master netting agreements, the Company has elected not to present these contracts on a net settlement amount basis, and therefore present these contracts on a gross basis on the accompanying consolidated balance sheets at December 31, 2017 and 2016. Cash Flow Hedging Instruments The Company uses foreign currency forward contracts designated as qualifying cash flow hedging instruments to help mitigate the Company's foreign currency exposure on intercompany sales of inventory to its foreign subsidiaries. These contracts generally mature within 12 to 15 months from their inception. At December 31, 2017 and 2016, the notional amounts of the Company's foreign currency forward contracts designated as cash flow hedge instruments were approximately $14,210,000 and $55,938,000, respectively. The reporting of gains and losses on these cash flow hedging instruments depends on whether the gains or losses are effective at offsetting changes in the cash flows of the underlying hedged items. The Company uses the critical terms method to measure the effectiveness of the foreign currency forward contracts and evaluates the effectiveness on a quarterly basis. The effective portion of the gains and losses on the hedging instruments are recorded in other comprehensive income until recognized in earnings during the period that the hedged transactions take place. Any ineffective portion of the gains and losses from the hedging instruments is recognized in earnings immediately. The Company would discontinue hedge accounting prospectively (i) if it is determined that the derivative is no longer effective in offsetting changes in the cash flows of a hedged item, (ii) when the derivative expires or is sold, terminated, or exercised, (iii) if it becomes probable that the forecasted transaction being hedged by the derivative will not occur, (iv) if a hedged firm commitment no longer meets the definition of a firm commitment, or (v) if it is determined that designation of the derivative as a hedge instrument is no longer appropriate. The Company estimates the fair value of its foreign currency forward contracts based on pricing models using current market rates. These contracts are classified under Level 2 of the fair value hierarchy (see Note 15). As of December 31, 2017, the Company recorded a net loss of $2,679,000 in other comprehensive income (loss) related to its hedging activities. Of this amount, for the year ended December 31, 2017, net losses of $187,000 were relieved from other comprehensive income and recognized in cost of goods sold for the underlying intercompany sales that were recognized. There were no ineffective gains or losses recognized during 2017. During 2015, the Company recognized $1,149,000 in other income (expense) as a result of hedge ineffectiveness, of which $576,000 was reclassified from other comprehensive income for hedges that no longer met the accounting requirements. Gains on forward points of $287,000 were recognized as incurred. Based on the current valuation, the Company expects to reclassify net losses of $20,000 from accumulated other comprehensive income (loss) into net earnings during the next 12 months. See Note 2 for a rollforward of accumulated other comprehensive income. The following tables summarize the net effect of all cash flow hedges on the consolidated financial statements for the year ended December 31, 2017 and 2016 (in thousands):
|  | Net Gain (Loss) Recognized in Other Comprehensive Income (Effective Portion)
|  | Year Ended December 31,
Derivatives designated as cash flow hedging instruments |  | 2017 |  | 2016 |  | 2015
Foreign currency forward contracts |  | $ | (2,679 | ) |  | $ | (538 | ) |  | $ | 2,316 |
|  | Net Gain (Loss) Reclassified from Other Comprehensive Income into Earnings (Effective Portion)
|  | Year Ended December 31,
Derivatives designated as cash flow hedging instruments |  | 2017 |  | 2016 |  | 2015
Foreign currency forward contracts |  | $ | (187 | ) |  | $ | (2,514 | ) |  | $ | 1,791 |
|  | Net Gain Recognized in Other Income (Expense) (Ineffective Portion)
|  | Year Ended December 31,
Derivatives designated as cash flow hedging instruments |  | 2017 |  | 2016 |  | 2015
Foreign currency forward contracts |  | $ | — |  |  | $ | — |  |  | $ | 1,149 |
Foreign Currency Forward Contracts Not Designated as Hedging Instruments The Company uses foreign currency forward contracts that are not designated as qualified hedging instruments to mitigate certain balance sheet exposures (payables and receivables denominated in foreign currencies), as well as gains and losses resulting from the translation of the operating results of the Company’s international subsidiaries into U.S. dollars for financial reporting purposes. These contracts generally mature within 12 months from their inception. At December 31, 2017, 2016 and 2015, the notional amounts of the Company’s foreign currency forward contracts used to mitigate the exposures discussed above were approximately $4,821,000, $14,821,000 and $43,098,000, respectively. The decrease in foreign currency forward contracts reflects the general timing of when the Company enters into these contracts. The Company estimates the fair values of foreign currency forward contracts based on pricing models using current market rates, and records all derivatives on the balance sheet at fair value with changes in fair value recorded in the statement of operations. The foreign currency contracts are classified under Level 2 of the fair value hierarchy (see Note 15). The following table summarizes the location of gains and losses on the consolidated statements of operations that were recognized during the years ended December 31, 2017, 2016 and 2015, respectively, in addition to the derivative contract type (in thousands):
|  |  | Amount of Gain (Loss) Recognized in Income on Derivative Instruments
Derivatives not designated as hedging instruments | Location of gain (loss) recognized in income on derivative instruments |  | Years Ended December 31,
| 2017 |  | 2016 |  | 2015
Foreign currency forward contracts | Other income (expense), net |  | $ | (7,985 | ) |  | $ | (6,563 | ) |  | $ | 1,322 |
In addition, during the year ended December 31, 2017 and 2016, the Company recognized net foreign currency gains of $808,000 and $226,000 related to transactions with foreign subsidiaries, respectively. During the year ended December 31, 2015, the Company recognized net foreign currency losses of $1,611,000, respectively, related to transactions with foreign subsidiaries.

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