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Derivative Instruments and Hedging Activities | 9 Months Ended
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Sep. 30, 2017
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We participate in foreign exchange forward contracts in connection with the management of exposure to fluctuations in foreign exchange rates. Cash Flow Hedges Our cash flow hedging activities utilize foreign exchange forward contracts to reduce the risk that movements in exchange rates will adversely affect the net cash flows resulting from the planned purchase of products from foreign suppliers. Purchases of U.S. denominated inventory by our European subsidiary represent our primary exposure. Changes in the fair value of derivatives designated as cash flow hedges are not recognized in current operating results, but are recorded in accumulated other comprehensive income. Amounts related to cash flow hedges are reclassified from accumulated other comprehensive income when the underlying hedged item impacts earnings. This reclassification is recorded in the same line item of the consolidated statements of income as where the effects of the hedged item are recorded, which is cost of sales. Undesignated Hedges We have certain customers and suppliers who are invoiced or pay in a non-functional currency. Changes in the monetary exchange rates may adversely affect our results of operations and financial condition, as outstanding non-functional balances are revalued to the functional currency through profit and loss. When appropriate, we utilize foreign exchange forward contracts to help manage the volatility relating to these valuation exposures. All changes in the fair value of our derivative instruments that do not qualify for or are not designated for hedged accounting transactions are recognized as other income (expense) in the Consolidated Statements of Income. As of September 30, 2017, we had foreign exchange forward contracts outstanding with notional amounts totaling $7.0 million (€5.9 million), which hedge a portion of projected inventory purchases expected to be settled in the fourth quarter of 2017. We have determined that there was no hedge ineffectiveness for the quarter ended September 30, 2017 related to these contracts. We do not hold or issue derivative instruments for trading or other speculative purposes. Our derivative instruments are recorded in the Consolidated Balance Sheets at their fair values. Our derivative instruments are not subject to master netting arrangements and are not offset in the Consolidated Balance Sheets. The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of September 30, 2017 and December 31, 2016 were as follows:
(In thousands) |  | Balance Sheet Location |  | September 30, 2017 |  |  | December 31, 2016 |
Derivatives Not Designated as Hedging Instruments (Level 2): |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts – derivative assets |  | Other receivables |  | $ | — |  |  | $ | 159 |
Foreign exchange contracts – derivative liabilities |  | Accounts payable |  |  | (402 | ) |  |  | — |
Total derivatives |  |  |  | $ | (402 | ) |  | $ | 159 |
The change in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the three and nine months ended September 30, 2017 and 2016 were as follows:
|  |  |  | Three Months Ended |  |  | Nine Months Ended |
|  | Income Statement |  | September 30, |  |  | September 30, |
(In thousands) |  | Location |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Other income (expense) |  | $ | (334 | ) |  | $ | (37 | ) |  | $ | (819 | ) |  | $ | 153 |
The change in our derivatives designated as hedging instruments recorded in other comprehensive income (OCI) and reclassified to income, net of tax, during the three and nine months ended September 30, 2017 and 2016 were as follows:
|  | Amount of Gains (Losses) Recognized in |  |  |  |  | Amount of Gains (Losses) Reclassified |
|  | OCI on Derivatives |  |  |  |  | from AOCI into Income |
|  | Three Months Ended |  |  | Location of Gains |  | Three Months Ended |
|  | September 30, |  |  | (Losses) Reclassified |  | September 30, |
(In thousands) |  | 2017 |  |  | 2016 |  |  | from AOCI into Income |  | 2017 |  |  | 2016 |
Derivatives Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | (127 | ) |  | $ | — |  |  | Cost of Sales |  | $ | (269 | ) |  | $ | — |
|  | Amount of Gains (Losses) Recognized in |  |  |  |  | Amount of Gains (Losses) Reclassified |
|  | OCI on Derivatives |  |  |  |  | from AOCI into Income |
|  | Nine Months Ended |  |  | Location of Gains |  | Nine Months Ended |
|  | September 30, |  |  | (Losses) Reclassified |  | September 30, |
(In thousands) |  | 2017 |  |  | 2016 |  |  | from AOCI into Income |  | 2017 |  |  | 2016 |
Derivatives Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | (619 | ) |  | $ | — |  |  | Cost of Sales |  | $ | (423 | ) |  | $ | — |

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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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