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Derivative Financial Instruments and Risk Management | 9 Months Ended
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Oct. 28, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments and Risk Management | (13) Derivative Financial Instruments and Risk Management As a multinational enterprise, AstroNova is exposed to certain risks relating to our ongoing business operations. We employ a number of practices to manage these risks, including operating and financing activities, and where appropriate, the use of derivative instruments. The primary risks managed by using derivative instruments are interest rate risk and foreign currency exchange rate risk. ASC 815, “Derivatives and Hedging,” requires the Company to recognize all of its derivative instruments as either assets or liabilities in the statement of financial position at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the statement of income during the current period. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (OCI) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in “interest expense” when the hedged transactions are interest cash flows associated with floating-rate debt, or “other income (expense)” for portions reclassified relating to the remeasurement of the debt). The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffectiveness portion), or hedge components excluded from the assessment of effectiveness, are recognized in the statement of financial income during the current period. In connection with the Credit Agreement, we entered into a cross-currency interest rate swap to manage the interest rate risk and foreign currency exchange risk associated with the floating-rate foreign currency-denominated term loan borrowing by our Danish Subsidiary and, in accordance with the guidance in ASC 815, have designated this swap as a cash flow hedge of floating-rate borrowings. The cross-currency interest rate swap agreement utilized by the Company effectively modifies the Company’s exposure to interest rate risk and foreign currency exchange rate risk by converting approximately $8.9 million of the Company’s floating-rate debt denominated in U.S. Dollars on our Danish subsidiary’s books to a fixed-rate debt denominated in Danish Krone for the next five years, thus reducing the impact of interest-rate and foreign currency exchange rate changes on future interest expense and principal repayments. This swap involves the receipt of floating rate amounts in U.S. Dollars in exchange for fixed-rate interest payments in Danish Krone, as well as exchanges of principal at the inception spot rate, over the life of the Credit Agreement. Subsequent to the fiscal quarter end, on November 30, 2017, the Parties entered into a Second Amendment to the Credit Agreement with Bank of America, N.A. which provides for a term loan to the Company in the principal amount of $15.0 million. In connection with this, the Company entered into certain hedging arrangements with Bank of America to manage the variable interest rate risk associated with its payments in respect to the $15.0 million term loan. As of October 28, 2017, the total notional amount of the Company’s cross-currency interest rate swap was $8.1 million; the fair value was $0.9 million. The following tables present the impact of the derivative instrument in our condensed consolidated financial statements for the three and nine months ended October 28, 2017 and October 29, 2016:
|  | Three Months Ended |
|  | Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) |  |  | Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |  | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |
Cash Flow Hedge (In thousands) |  | October 28, 2017 |  |  | October 29, 2016 |  |  |  | October 28, 2017 |  |  | October 29, 2016 |
Swap contract |  | $ | 137 |  |  | $ | — |  |  | Other Income (Expense) |  | $ | 134 |  |  | $ | — |
|  | Nine Months Ended |
|  | Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) |  |  | Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |  | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |
Cash Flow Hedge (In thousands) |  | October 28, 2017 |  |  | October 29, 2016 |  |  |  | October 28, 2017 |  |  | October 29, 2016 |
Swap contract |  | $ | (898 | ) |  | $ | — |  |  | Other Income (Expense) |  | $ | (819 | ) |  | $ | — |
The swap contract resulted in no ineffectiveness for the three and nine months ended October 28, 2017, and no gains or losses were reclassified into earnings as a result of the discontinuance of the swap contract due to the original forecasted transaction no longer being probable of occurring. At October 28, 2017, the Company expects to reclassify approximately $66,000 of net gains on the swap contract from accumulated other comprehensive income to earnings during the next 12 months due to changes in foreign exchange rates and the payment of variable interest associated with the floating-rate debt.

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- References No definition available. + Details
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- 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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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