XML 30 R20.htm IDEA: XBRL DOCUMENT
v3.19.1

Derivatives | 3 Months Ended
--- | ---
Mar. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Derivatives In the normal course of business, the Company is exposed to foreign currency exchange rate risk and interest rate risk on its variable-rate debt. To manage these risks, the Company utilizes a variety of practices including, where considered appropriate, derivative instruments. The Company has no derivative instruments for trading or speculative purposes or derivatives with credit risk-related contingent features. All derivative instruments used by the Company are either exchange traded or are entered into with major financial institutions in order to reduce credit risk and risk of nonperformance by third parties. The fair values of the Company’s derivative instruments are determined using observable inputs and are considered Level 2 assets or liabilities. The Company utilizes currency forward, swap and, to a lesser extent, option contracts to selectively hedge its exposure to foreign currency risk when it is practical and economical to do so. The use of these contracts minimizes transactional exposure to exchange rate changes. We designate certain of our foreign currency hedges as cash flow hedges. Changes in the fair value of cash flow hedges are reported as a component of other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings. For foreign exchange contracts not designated as cash flow hedges, changes in the contracts’ fair values are recorded to net income each period. The Company selectively hedges its exposure to interest rate increases on variable-rate, long-term debt when it is practical and economical to do so. Changes in the fair value of interest rate contracts considered cash flow hedges are reported as a component of other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings. On January 20, 2017, the Company entered into an interest rate swap transaction with JPMorgan Chase Bank, N.A. for a three-year term on a notional amount of $315 million. The interest rate swap is intended to manage the Company's interest rate risk by fixing the interest rate on a portion of the Company's debt currently outstanding under its credit facility that was previously subject to a floating interest rate equal to 1-month LIBOR plus a credit spread. The swap provides for the Company to pay a fixed rate of 1.65% per annum in addition to the credit spread on such portion of its outstanding debt in exchange for receiving a variable interest rate based on 1-month LIBOR. On September 25, 2018, in conjunction with the debt refinancing discussed in Note 11. Debt, the Company settled a notional amount of $130 million which resulted in a gain of $1.8 million as of the settlement date. This gain will be amortized on a ratable basis from Accumulated other comprehensive income into income as interest expense over the remaining term of the interest rate swap. On January 20, 2017, the Company also entered into a three-year cross-currency swap with JPMorgan Chase Bank, N.A. designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $100 million swapped to €93.7 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 1.65% per annum and pay to our swap counterparty Euro interest at a fixed rate of -0.18% per annum. On October 24, 2018, the Company also entered into a three-year cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $75 million swapped to €65.4 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 3.6725% per annum. On January 29, 2019, the Company entered into a cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $75 million swapped to €66.0 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 4.0525% per annum. The cross-currency swap will mature on October 1, 2021. The following table presents the fair value of asset and liability derivatives and the respective balance sheet locations at March 31, 2019 ($ in millions):
| Asset Derivatives |  | Liability Derivatives
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivatives designated as hedges: |  |  |  |  |  |  |
Foreign exchange contracts | Accounts receivable, net |  | $ | 1.6 |  |  | Accrued expenses |  | $ | 1.1 |
Foreign exchange contracts | Other assets |  | 4.7 |  |  | Other liabilities |  | 6.0 |
Interest rate contracts | Other assets |  | 1.2 |  |  | Other liabilities |  | — |
Total derivatives designated as hedges |  |  | 7.5 |  |  |  |  | 7.1 |
Derivatives not designated as hedges: |  |  |  |  |  |  |
Foreign exchange contracts | Accounts receivable, net |  | — |  |  | Accrued expenses |  | 0.1 |
Total derivatives not designated as hedges |  |  | — |  |  |  |  | 0.1 |
Total derivatives |  |  | $ | 7.5 |  |  |  |  | $ | 7.2 |
The following table presents the fair value of asset and liability derivatives and the respective balance sheet locations at December 31, 2018 ($ in millions):
| Asset Derivatives |  | Liability Derivatives
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivatives designated as hedges: |  |  |  |  |  |  |
Foreign exchange contracts | Accounts receivable, net |  | $ | 2.0 |  |  | Accrued expenses |  | $ | 1.3 |
Foreign exchange contracts | Other assets |  | 1.0 |  |  | Other liabilities |  | 8.8 |
Interest rate contracts | Other assets |  | 1.8 |  |  | Other liabilities |  | — |
Total derivatives designated as hedges |  |  | 4.8 |  |  |  |  | 10.1 |
Derivatives not designated as hedges: |  |  |  |  |  |  |
Foreign exchange contracts | Accounts receivable, net |  | 0.1 |  |  | Accounts payable |  | — |
Total derivatives not designated as hedges |  |  | 0.1 |  |  |  |  | — |
Total derivatives |  |  | $ | 4.9 |  |  |  |  | $ | 10.1 |
The following table provides the gross effect that derivative instruments in cash flow hedging relationships had on accumulated other comprehensive income (loss), or AOCI, and results of operations ($ in millions):
Derivatives Designated as Cash Flow Hedging Relationships |  | Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax |  | Location of Gain (Loss) Reclassified from AOCI |  | Gain (Loss) Reclassified from AOCI
|  | Three Months Ended |  |  |  | Three Months Ended
|  | March 31, |  |  |  | March 31,
|  | 2019 |  | 2018 |  |  |  | 2019 |  | 2018
Foreign exchange contracts |  | $ | 0.1 |  |  | $ | 0.4 |  |  | Net sales |  | $ | (0.2 | ) |  | $ | 0.6 |
Foreign exchange contracts |  | (0.3 | ) |  | (0.1 | ) |  | Other income, net |  | (0.4 | ) |  | (0.2 | )
Interest rate contracts |  | 0.6 |  |  | 2.2 |  |  | Interest expense |  | 1.5 |  |  | 0.4 |
Total |  | $ | 0.4 |  |  | $ | 2.5 |  |  |  |  | $ | 0.9 |  |  | $ | 0.8 |
The Company's designated derivative instruments are highly effective. As such, related to the hedge ineffectiveness or amounts excluded from hedge effectiveness testing, there were no gains or losses recognized immediately in income for the three months ended March 31, 2019 or 2018, other than those related to the cross-currency swap, noted below. In January 2018, the Company early adopted the guidance in ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." Upon adoption of this standard, the Company elected to de-designate the original hedging relationship of its pay-EUR, receive-USD cross currency swap and re-designate the cross currency swap with the terms based on the spot rate of the EUR. Prospectively, future changes in the components related to the spot change on the notional will be recorded in OCI and remain there until the hedged subsidiaries are substantially liquidated. Starting with the adoption date, all coupon payments will be recorded in earnings and the initial value of excluded components currently recorded in AOCI as an unrealized translation adjustment will be amortized into interest expense over the remaining 25 months of the swap, resulting in a positive impact to Net income. As of March 31, 2019, the loss, net of taxes, recognized in Other comprehensive income on the cross currency swap derivative was $0.6 million. For the three months ended March 31, 2019, $0.2 million was reclassified from Accumulated other comprehensive income into income as interest expense and $0.5 million was recognized in income as derivative amounts excluded from effectiveness testing as Interest expense. The following table provides the effect that derivative instruments not designated as cash flow hedging instruments had on net income ($ in millions):
Derivatives Not Designated as Cash Flow Hedging Instruments |  | Location of Gain (Loss) Recognized in Income |  | Amount of Gain (Loss) Recognized in Income
|  |  |  | Three Months Ended
|  |  |  | March 31, 2019 |  | March 31, 2018
Foreign exchange contracts |  | Other income, net |  | $ | (0.1 | ) |  | $ | 0.5 |

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