XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.19.1

Fair Value of Financial Instruments | 3 Months Ended
--- | ---
Mar. 31, 2019
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We enter into derivative instruments for risk management purposes only. We operate internationally and in the normal course of business are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We use forward contracts, a type of derivative instrument, to manage certain foreign currency exposures. By nature, all financial instruments involve market and credit risks. We enter into forward contracts with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. While there can be no assurance, we do not anticipate any material non-performance by any of these counterparties. Foreign Currency Forward Contracts. We hedge forecasted intercompany sales denominated in foreign currencies through the use of forward contracts. We account for these forward contracts as cash flow hedges. To the extent these forward contracts meet hedge accounting criteria, changes in their fair value are not included in current earnings but are included in accumulated other comprehensive loss. These changes in fair value will be recognized into earnings as a component of sales or cost of sales when the forecasted transaction occurs. We also enter into forward contracts to exchange foreign currencies for United States dollars in order to hedge our currency transaction exposures. These forward contracts settle each month at month-end, at which time we enter into new forward contracts. We have not designated these forward contracts as hedges and have not applied hedge accounting to them. The following table presents the notional contract amounts for forward contracts outstanding:
|  |  | As of
| FASB ASC Topic 815 Designation |  | March 31, 2019 |  | December 31, 2018
Forward exchange contracts | Cash flow hedge |  | $ | 155,730 |  |  | $ | 155,313 |
Forward exchange contracts | Non-designated |  | 42,977 |  |  | 39,631 |
The remaining time to maturity as of March 31, 2019 is within two years for designated foreign exchange contracts and approximately one month for non-designated forward exchange contracts. Statement of comprehensive income presentation Derivatives designated as cash flow hedges Foreign exchange contracts designated as cash flow hedges had the following effects on accumulated other comprehensive income (loss) and net earnings on our consolidated condensed statement of comprehensive income and our consolidated condensed balance sheet:
|  | Amount of Gain (Loss) Recognized in AOCI |  | Statement of Consolidated Condensed of Comprehensive Income |  | Amount of Gain (Loss) Reclassified from AOCI
|  | Three Months Ended March 31, |  |  |  | Three Months Ended March 31, | Three Months Ended March 31,
|  |  |  |  |  |  |  | Total Amount of Line Item Presented |  |  |  |
Derivative Instrument |  | 2019 |  | 2018 |  | Location of amount reclassified |  | 2019 | 2018 |  | 2019 |  | 2018
Foreign exchange contracts |  | $ | 1,738 |  |  | $ | 829 |  |  | Net Sales |  | $ | 218,378 |  | $ | 202,064 |  |  | $ | 1,497 |  |  | $ | (1,413 | )
|  |  |  |  |  |  | Cost of Sales |  | 96,940 |  | 92,507 |  |  | 101 |  |  | 151 |
Pre-tax gain (loss) |  | $ | 1,738 |  |  | $ | 829 |  |  |  |  |  |  |  | $ | 1,598 |  |  | $ | (1,262 | )
Tax expense (benefit) |  | 420 |  |  | 200 |  |  |  |  |  |  |  | 386 |  |  | (305 | )
Net gain (loss) |  | $ | 1,318 |  |  | $ | 629 |  |  |  |  |  |  |  | $ | 1,212 |  |  | $ | (957 | )
At March 31, 2019, $4.0 million of net unrealized gains on forward contracts accounted for as cash flow hedges, and included in accumulated other comprehensive loss, are expected to be recognized in earnings in the next twelve months. Derivatives not designated as cash flow hedges Net gains and losses from derivative instruments not accounted for as hedges offset by gains and losses on our intercompany receivables on our condensed consolidated statements of earnings were:
|  |  |  | Three Months Ended March 31,
Derivative Instrument |  | Location on Consolidated Condensed Statement of Comprehensive Income |  | 2019 |  | 2018
Net gain (loss) on currency hedge contracts |  | Selling and administrative expense |  | $ | (181 | ) |  | $ | (69 | )
Net gain (loss) on currency transaction exposures |  | Selling and administrative expense |  | $ | (229 | ) |  | $ | (127 | )
Balance sheet presentation We record these forward foreign exchange contracts at fair value. The following tables summarize the fair value for forward foreign exchange contracts outstanding at March 31, 2019 and December 31, 2018:
March 31, 2019 | Location on Condensed Balance Sheet | Asset Fair Value |  | Liabilities Fair Value |  | Net Fair Value
Derivatives designated as hedged instruments: |  |  |  |  |  |
Foreign exchange contracts | Prepaids and other current assets | $ | 5,291 |  |  | $ | (65 | ) |  | $ | 5,226 |
Foreign exchange contracts | Other long-term assets | 428 |  |  | (128 | ) |  | 300 |
|  | $ | 5,719 |  |  | $ | (193 | ) |  | $ | 5,526 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |
Foreign exchange contracts | Prepaids and other current assets | 14 |  |  | (102 | ) |  | (88 | )
Total derivatives |  | $ | 5,733 |  |  | $ | (295 | ) |  | $ | 5,438 |
December 31, 2018 | Location on Condensed Balance Sheet | Asset Fair Value |  | Liabilities Fair Value |  | Net Fair Value
Derivatives designated as hedged instruments: |  |  |  |  |  |
Foreign exchange contracts | Prepaids and other current assets | $ | 5,817 |  |  | $ | (431 | ) |  | $ | 5,386 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |
Foreign exchange contracts | Prepaids and other current assets | 19 |  |  | (217 | ) |  | (198 | )
Total derivatives |  | $ | 5,836 |  |  | $ | (648 | ) |  | $ | 5,188 |
Our forward foreign exchange contracts are subject to a master netting agreement and qualify for netting in the consolidated condensed balance sheets. Fair Value Disclosure. FASB guidance defines fair value and establishes a framework for measuring fair value and related disclosure requirements. This guidance applies when fair value measurements are required or permitted. The guidance indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Fair value is defined based upon an exit price model. Valuation Hierarchy. A valuation hierarchy was established for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks or inputs that are derived principally from, or corroborated by, observable market data through correlation. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. There have been no significant changes in the assumptions. Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of March 31, 2019 consist of forward foreign exchange contracts. The Company values its forward foreign exchange contracts using quoted prices for similar assets. The most significant assumption is quoted currency rates. The value of the forward foreign exchange contract assets and liabilities were valued using Level 2 inputs and are listed in the table above. The carrying amounts reported in our consolidated condensed balance sheets for cash and cash equivalents, accounts receivable, accounts payable and long-term debt approximate fair value.

X
- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 Reference 2: 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_DerivativesAndFairValueTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration