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Commitments and Contingencies
9 Months Ended
Sep. 30, 2017
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

 

NOTE 8 – Commitments and Contingencies

Purchase commitments – As of September 30, 2017, we had approximately $36.8 million in non-cancelable purchase contracts related to capital expenditures, primarily related to Asia manufacturing facilities.

 

Defined Benefit Plan - We have a contributory defined benefit plan that covers certain employees in the United Kingdom.  As of September 30, 2017, the unfunded liability for this defined benefit plan was approximately $32.3 million.  We are obligated to make annual contributions, each year through December 2029, of approximately GBP 2 million (approximately $2.6 million based on a GBP:USD exchange rate of 1.3).  The trustees are required to review the funding position every three years, and the most recent review was carried out as of April 5, 2016. The outcome of a review can result in a change in the amount of the payment.

 

Contingencies – From time to time, we are involved in various legal proceedings that arise in the normal course of business. While we intend to defend any lawsuit vigorously, we presently believe that the ultimate outcome of any current pending legal proceeding will not have any material adverse effect on our financial position, cash flows or operating results. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages, which could impact on our business and operating results for the period in which the ruling occurs or future periods.  Based on information available, we evaluate the likelihood of potential outcomes. We record the appropriate liability when the amount is deemed probable and reasonably estimable. In addition, we do not accrue for estimated legal fees and other directly related costs as they are expensed as incurred.  The Company is not currently a party to any pending litigation that the Company considers material.

 

Derivative Financial Instruments– At September 30, 2017 the Company had approximately $40.2 million in foreign currency hedges, which are intended to offset approximately 25% of the Company's estimated foreign currency exposure.  These foreign currency hedges contributed approximately $0.5 million of income for the three months and nine months ended September 30, 2017. Currently all of our foreign currency hedges mature at each month end. The Company then has the option to enter into new foreign currency hedges. The Company plans to continue hedging its foreign currency risk.  

 

The Company also has interest rate derivative agreements with a notional amount of $150.0 million and $220.0 million as of December 31, 2016 and September 30, 2017, respectively.  During the third quarter of 2017, the Company entered into additional agreements to further hedge against the risk of interest rate volatility.  The entire $220.0 million notional amount is accounted for as an effective cash flow hedge, with $2.4 million and $3.1 million recorded as assets in the condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016, respectively and$2.4 million and $2.3 million accrued in the accumulated other comprehensive income as of September 30, 2017 and December 31, 2016, respectively.  For the three and nine month ended September 30, 2017, $0.2 million and $0.6 million have been recorded to the interest expense account, respectively.