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DERIVATIVE INSTRUMENTS | 9 Months Ended
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Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS Interest Rate Hedging The Company’s interest rate risk relates to U.S. dollar denominated variable interest rate borrowings. On June 22, 2016, the Company entered into two $50.0 million interest rate swap derivative instruments with separate financial institutions, each with an effective date of December 31, 2016 to manage its earnings and cash flow exposure to changes in interest rates covering a portion of its floating-rate debt. These interest rate swaps expire on June 30, 2019. On July 12, 2016, the Company entered into an additional $50.0 million interest rate swap derivative instruments with a separate financial institution with an effective date of December 31, 2016 to manage its earnings and cash flow exposure to changes in interest rates covering a portion of its floating-rate debt. This interest rate swap was also designated as a cash flow hedge and expires on June 30, 2019. On August 10, 2015 the interest rate swap derivative instrument the Company entered into on August 10, 2010 with an effective date of December 31, 2010 expired. The interest rate swap was used to manage the Company's earnings and cash flow exposure to changes in interest rates by converting a portion of its floating-rate debt into fixed-rate debt. The Company designated these derivative instruments as cash flow hedges. The Company recorded the effective portion of any change in the fair value of a derivative instrument designated as a cash flow hedge as unrealized gains or losses in accumulated other comprehensive income (“AOCI”), net of tax, until the hedged item affected earnings, at which point the effective portion of any gain or loss was reclassified to earnings. If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time. As of September 30, 2016, the Company had total outstanding interest rate swaps of $150.0 million with an effective date of December 31, 2016. Foreign Currency Hedging From time to time the Company enters into foreign currency hedge contracts intended to protect the U.S. dollar value of certain forecasted foreign currency denominated transactions. The Company records the effective portion of any change in the fair value of foreign currency cash flow hedges in AOCI, net of tax, until the hedged item affects earnings. Once the related hedged item affects earnings, the Company reclassifies the effective portion of any related unrealized gain or loss on the foreign currency cash flow hedge to earnings. If the hedged forecasted transaction does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. The success of the Company’s hedging program depends, in part, on forecasts of certain activity denominated in euros. The Company may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activity during periods of currency volatility. In addition, changes in currency exchange rates related to any unhedged transactions may affect its earnings and cash flows. Counterparty Credit Risk The Company manages its concentration of counterparty credit risk on its derivative instruments by limiting acceptable counterparties to a group of major financial institutions with investment grade credit ratings, and by actively monitoring their credit ratings and outstanding positions on an ongoing basis. Therefore, the Company considers the credit risk of the counterparties to be low. Furthermore, none of the Company’s derivative transactions are subject to collateral or other security arrangements, and none contain provisions that depend upon the Company’s credit ratings from any credit rating agency. Fair Value of Derivative Instruments The Company has classified all of its derivative instruments within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of the derivative instruments. The fair value of the foreign currency forward exchange contracts related to inventory purchases is determined by comparing the forward rate as of the period end and the settlement rate specified in each contract. The fair value of the interest rate swaps was developed using a market approach based on publicly available market yield curves and the terms of the related swap. The Company performs ongoing assessments of counterparty credit risk. The following table summarizes the fair value and presentation for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of September 30, 2016:
Location on Balance Sheet (1): |  | Fair Value as of September 30, 2016
|  | (In thousands)
Derivatives designated as hedges — Assets: |  |
Interest rate swap — Other assets (2) |  | $ | 37 |
Derivatives designated as hedges — Liabilities: |  |
Interest rate swap — Other liabilities (2) |  | 21 |
(1) | The Company classifies derivative assets and liabilities as non-current based on the cash flows expected to be incurred within the following 12 months.
(2) | At September 30, 2016, the notional amount related to the Company’s interest rate swaps was $150.0 million. There is no expected reduction in notional amount in the next twelve months.
There were no instruments outstanding as of December 31, 2015. The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying condensed consolidated statements of operations during the three and nine months ended September 30, 2016 and 2015:
| Balance in AOCI Beginning of Quarter |  | Amount of Loss Recognized in AOCI- Effective Portion |  | Amount of Loss Reclassified from AOCI into Earnings-Effective Portion |  | Balance in AOCI End of Quarter |  | Location in Statements of Operations
| (In thousands)
Three Months Ended September 30, 2016 |  |  |  |  |  |  |  |  |
Interest rate swap | $ | (602 | ) |  | $ | 618 |  |  | $ | — |  |  | $ | 16 |  |  |
| $ | (602 | ) |  | $ | 618 |  |  | $ | — |  |  | $ | 16 |  |  |
Three months ended September 30, 2015 |  |  |  |  |  |  |  |  |
Interest rate swap | $ | (161 | ) |  | $ | — |  |  | $ | (161 | ) |  | $ | — |  |  | Interest (expense)
| $ | (161 | ) |  | $ | — |  |  | $ | (161 | ) |  | $ | — |  |  |
| Balance in AOCI Beginning of Year |  | Amount of Loss Recognized in AOCI- Effective Portion |  | Amount of Loss Reclassified from AOCI into Earnings-Effective Portion |  | Balance in AOCI End of Quarter |  | Location in Statements of Operations
| (In thousands)
Nine Months Ended September 30, 2016 |  |  |  |  |  |  |  |  |
Interest rate swap | $ | — |  |  | $ | 16 |  |  | $ | — |  |  | $ | 16 |  |  |
| $ | — |  |  | $ | 16 |  |  | $ | — |  |  | $ | 16 |  |  |
Nine months ended September 30, 2015 |  |  |  |  |  |  |  |  |
Interest rate swap | $ | (898 | ) |  | $ | (25 | ) |  | (923 | ) |  | $ | — |  |  | Interest (expense)
| $ | (898 | ) |  | $ | (25 | ) |  | $ | (923 | ) |  | $ | — |  |  |
The Company recognized no gains or losses resulting from ineffectiveness of cash flow hedges during the three and nine months ended September 30, 2016 and 2015.

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