XML 114 R18.htm IDEA: XBRL DOCUMENT
v3.20.1

DERIVATIVES | 12 Months Ended
--- | ---
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES | DERIVATIVES Interest Rate Swap Agreements The Company is a party to interest rate swap agreements, with an aggregate notional value of $100.0 million at December 31, 2019. The Company designated these 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. In June 2019, the Company entered into additional interest rate swap agreements, with an aggregate notional value of $25.0 million at December 31, 2019. These non-designated interest rate swaps serve 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 and expire in February 2025. The Company's net total outstanding notional value of interest rate swaps was $125.0 million at December 31, 2019. Foreign Exchange Contracts The Company is a party from time to time to certain foreign exchange contracts, primarily to offset the earnings impact related to fluctuations in foreign currency exchange rates associated with inventory purchases denominated in foreign currencies. Fluctuations in the value of certain foreign currencies as compared to the USD may positively or negatively affect the Company’s revenues, gross margins, operating expenses, and retained earnings, all of which are expressed in USD. 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 foreign suppliers. The Company does not hedge the translation of foreign currency profits into USD, as the Company regards this as an accounting exposure rather than an economic exposure. The aggregate gross notional values of foreign exchange contracts at December 31, 2019 was $7.3 million. The Company is exposed to market risks as well as changes in foreign currency exchange rates as measured against the USD 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 as of December 31, 2019, the Company does not have any foreign currency forward contract derivatives that are not designated as hedges. These foreign exchange contracts have been designated as hedges in to order to apply hedge accounting. No contracts were outstanding at December 31, 2018. The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows (in thousands):
|  |  | December 31, |  |
Derivatives designated as hedging instruments | Balance Sheet Location |  | 2019 |  | 2018
Interest rate swaps | Prepaid expenses |  | $ | 427 |  |  | $ | 42 |
| Other assets |  | 1,267 |  |  | 157 |
Foreign exchange contracts | Accrued expenses |  | 180 |  |  | — |
|  |  | December 31, |  |
Derivatives not designated as hedging instruments | Balance Sheet Location |  | 2019 |  | 2018
Interest rate swaps | Other assets |  | $ | 402 |  |  | $ | — |
The fair value of the interest rate swaps 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 fair value of the foreign exchange contracts were based on Level 2 observable inputs using quoted market prices for similar assets in an active market. 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), net of taxes, related to the Company’s derivative financial instruments designated as hedging instruments are recognized in other comprehensive income (loss) as follows (in thousands):
| Year ended December 31, |  |  |  |
Derivatives designated as hedging instruments | 2019 |  | 2018 |  | 2017
Interest rate swaps | $ | 1,120 |  |  | $ | 161 |  |  | $ | 17 |
Foreign exchange contracts | $ | (117) |  |  |  | $ | — |  |  |  | $ | — |
Total | $ | 1,003 |  |  |  | $ | 161 |  |  |  | $ | 17 |
Realized gains or (losses) on the interest rate swaps are reclassified into earnings as interest expense as the interest expense on the debt is recognized. The Company had no terminated or matured interest rate swaps during the year ended December 31, 2019. Realized gains or (losses) on foreign exchange contracts that are reported in other comprehensive income (loss) are reclassified into cost of sales as the underlying inventory purchased is sold. During the year ended December 31, 2019, the Company reclassified $0.2 million of cash flow hedges in other comprehensive losses to earnings. This comprised of $(0.3) million related to interest rate swaps recognized in interest expense and a gain of $0.5 million related to foreign exchange contracts recognized in cost of sales. The amounts of the gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are recognized in earnings as follows (in thousands):
|  |  | Year Ended December 31, |  |  |  |
Derivatives not designated as hedging instruments | Location of Gain or (Loss) |  | 2019 |  | 2018 |  | 2017
Interest rate swaps | Interest expense |  | $ | 407 |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts | Selling, general & administrative expense |  | $ | — |  |  | $ | 150 |  |  | $ | (2,592) |

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