XML 26 R16.htm IDEA: XBRL DOCUMENT
v3.19.1

DERIVATIVES | 3 Months Ended
--- | ---
Mar. 31, 2019
DERIVATIVES | NOTE H- DERIVATIVES The Company is a party to interest rate swap agreements, with an aggregate notional value of $119.0 million at March 31, 2019. The Company designated the interest rate swaps as cash flow hedges of the Company’s exposure to the variability of the payment of interest on a portion of its Term Loan borrowings. The hedge periods of these agreements commenced in April 2018 and expire in March 2023. The notional amounts are reduced over these periods. The Company is exposed to market risks as well as changes in foreign currency exchange rates as measured against the U.S. dollar and each other, and changes to credit risk of derivative counterparties. The Company attempts to minimize these risks by primarily using foreign currency forward contracts and by maintaining counterparty credit limits. These hedging activities provide only limited protection against currency exchange and credit risk. Factors that could influence the effectiveness of the Company’s hedging programs include currency markets and availability of hedging instruments and liquidity of the credit markets. All foreign currency forward contracts that the Company enters into are components of hedging programs and are entered into for the sole purpose of hedging an existing or anticipated currency exposure. The Company does not enter into such contracts for speculative purposes and currently does not have any derivatives that are not designated as hedges. Fluctuations in the value of certain foreign currencies as compared to the U.S. dollar may positively or negatively affect the Company’s revenues, gross margins, operating expenses, and retained earnings, all of which are expressed in U.S. dollars. Where the Company deems it prudent, the Company engages in hedging programs using foreign currency forward contracts aimed at limiting the impact of foreign currency exchange rate fluctuations on earnings. The Company purchases short-term (i.e. 12 months or less) foreign currency forward contracts to protect against currency exchange risks associated with the payment of merchandise purchases to our foreign suppliers. The Company does not hedge the translation of foreign currency profits into U.S. dollars, as the Company regards this as an accounting exposure rather than an economic exposure. The aggregate gross notional values of foreign exchange contracts at March 31, 2019 were $ 13.5 million. These foreign exchange contracts have been designated as hedges as required in to order to apply hedge accounting. The fair values of the Company’s derivative financial instruments included in the condensed consolidated balance sheets are presented as follows (in thousands):
Derivatives designated as hedging instruments |  | Balance Sheet Location |  |  | March 31, 2019 |  |  | December 31, 2018 |
Interest rate swaps |  | Prepaid Expenses |  |  | $ | 177 |  |  | $ | 42 |
|  | Other assets |  |  |  | 656 |  |  |  | 157 |
Foreign exchange contracts |  | Prepaid Expenses |  |  | $ | 122 |  |  | $ | — |
The fair values of the derivatives have been obtained from the counterparties to the agreements and were based on Level 2 observable inputs using proprietary models and estimates about relevant future market conditions. The counterparties to the derivative financial instruments are major international financial institutions. The Company is exposed to credit risk for the net exchanges under these agreements, but not for the notional amounts. The Company does not anticipate non-performance by any of its counterparties. The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments are recognized in other comprehensive income (loss) as follows (in thousands):
|  | Three Months Ended March 31, |
Derivatives designated as hedging instruments |  | 2019 |  |  | 2018 |
Interest rate swaps |  | $ | 634 |  |  | $ | — |
Foreign exchange contracts |  |  | 122 |  |  |  | — |
The amounts of the loss related to the Company’s derivative financial instruments not designated as hedging instruments are recognized in earnings as follows (in thousands):
|  |  |  |  | Three Months Ended March 31, |
Derivatives not designated as hedging instruments |  | Location of loss |  |  | 2019 |  |  | 2018 |
Foreign exchange contracts |  | Selling, general and administrative expense |  |  | $ | — |  |  | $ | (1,515 | )

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