Derivative Financial Instruments |
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| Derivative Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Financial Instruments |
NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS The Company’s primary exchange rate risk management objective is to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates. The Company primarily focuses on mitigating changes in cash flows resulting from sales denominated in currencies other than the U.S. dollar. The Company manages this risk primarily by using currency forward and option contracts. If the anticipated transactions are deemed probable, the resulting relationships are formally designated as cash flow hedges. The Company accounts for these contracts as cash flow hedges and tests effectiveness by determining whether changes in the expected cash flow of the derivative offset, within a range, changes in the expected cash flow of the hedged item. At June 30, 2016, the Company’s derivative contracts had a remaining maturity of one and one-half years or less. The counterparty to these transactions had both long-term and short-term investment grade credit ratings. The maximum net exposure of the Company’s credit risk to the counterparty is generally limited to the aggregate unrealized loss of all contracts with that counterparty, which is $345 as of June 30, 2016. The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain on all contracts. At June 30, 2016, there was no such exposure to the counterparty. The Company’s derivative counterparty has strong credit ratings and as a result, the Company does not require collateral to facilitate transactions. The Company held the following contracts designated as hedged instruments as of June 30, 2016 and December 31, 2015:
For contracts that qualify as effective hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive loss and reclassified to sales in the period the underlying hedged transaction is recognized in earnings. Gains (losses) of $(202) and $997 were reclassified to sales during the three months ended June 30, 2016 and 2015, respectively, and $(343) and $2,596 were reclassified to sales during the six months ended June 30, 2016 and 2015, respectively. Gains of $61 and $168 were reclassified to discontinued operations, net of tax, during the three and six months ended June 30, 2015, respectively. The Company held the following contracts not designated as hedged instruments as of June 30, 2016. There were no derivative contracts not designated as hedged instruments as of December 31, 2015.
For contracts that do not qualify as effective hedge instruments, the ineffective portion of gains and losses resulting from changes in fair value of the instruments are included in earnings. Losses of $(42) were recorded to Other, net, associated with ineffective hedge instruments during the three and six months ended June 30, 2016. There were no gains (losses) recorded to Other, net, during the three and six months ended June 30, 2015. As of December 31, 2015, the Company reported an accumulated derivative instrument loss of $68. During the six months ended June 30, 2016, the Company reported accumulated other comprehensive loss of $77, as a result of the change in fair value of these contracts and reclassifications to sales and other income as discussed above, resulting in an accumulated derivative instrument loss of $145 reported as of June 30, 2016. The following table presents the balance sheet classification and fair value of derivative instruments as of June 30, 2016 and December 31, 2015:
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