8.	Derivative Instruments and Hedging Activities

For each foreign currency forward contract entered into in which the Company seeks to obtain cash flow hedge accounting treatment, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking the hedge transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method of measuring ineffectiveness. This process includes linking all foreign currency forward contracts to specific firm commitments or forecasted transactions and designating the foreign currency forward contracts as cash flow hedges. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the foreign currency forward contracts that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. The effective portion of these hedged items is reflected in Unrealized gain (loss) on cash flow hedges on the Condensed Consolidated Statements of Comprehensive Income. If it is determined that a foreign currency forward contract is

not

highly effective, or that it has ceased to be a highly effective hedge, the Company is required to discontinue hedge accounting with respect to that foreign currency forward contract prospectively.

As of

March

31,

2020

and

December

31,

2019,

the total notional amount of the foreign currency forward contracts designated as cash flow hedges was

$4.6

million (

CAD$6.5

million) and

$6.1

million (

CAD$7.9

million), respectively. All of the Company’s foreign currency forward contracts are subject to an enforceable master netting arrangement.

All of the Company’s Canadian forward contracts have maturities less than

twelve

months as of

March

31,

2020.

As of

March

31,

2020

and

December

31,

2019,

all foreign currency forward contracts were designated as cash flow hedges. For the

three

months ended

March

31,

2020

and

2019,

gains (losses) recognized in Net sales from foreign currency forward contracts

not

designated as hedging instruments were

$0.3

million and approximately

$0,

respectively. As of

March

31,

2020,

unrealized pretax gains on outstanding foreign currency forward contracts in Accumulated other comprehensive loss was approximately

$0.

Typically, outstanding foreign currency forward contract balances in Accumulated other comprehensive loss are expected to be reclassified to Net sales within the next

twelve

months as a result of underlying hedged transactions also being recorded in Net sales.