DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

Foreign currency forward contracts are utilized to mitigate the impact of currency fluctuations on assets and liabilities denominated in foreign currencies as well as on forecasted transactions denominated in foreign currencies. These contracts are considered derivative instruments and are recognized as either assets or liabilities and measured at fair value. For contracts that are designated and qualify as cash flow hedges, the gain or loss on the contracts is reported as a component of other comprehensive income (“OCI”) and reclassified from accumulated other comprehensive income (“AOCI”) into the “Sales” or “Cost of sales” line item on the Consolidated Statements of Operations when the underlying hedged transaction affects earnings, or “Other expense (income), net” when the hedging relationship is deemed to be ineffective. As of September 30, 2016 and December 31, 2015, the notional amounts of the derivative financial instruments designated to qualify for cash flow hedges were $50.9 million and $27.4 million, respectively. The Company expects that approximately $0.02 million of expense, net of income tax effect, to be reclassified from AOCI to earnings within the next 12 months. 

As of September 30, 2016 and December 31, 2015, the notional amounts of the derivative financial instruments not qualifying or otherwise designated as hedges were $34.3 million and $38.5 million, respectively. For the three months ended September 30, 2016 and 2015, gains of $0.5 million and losses of $1.9 million, respectively, were recorded related to this type of derivative financial instrument. For the nine months ended September 30, 2016 and 2015, respectively, gains of $0.03 million and losses of $0.3 million were recorded related to this type of derivative financial instrument. For contracts that are not designated as hedges, the gain or loss on the contract is recognized in current earnings in the “Other expense (income), net” line item on the Consolidated Statements of Operations.

The following table presents the fair value on the Consolidated Balance Sheets of the foreign currency forward contracts (in thousands):

	September 30, 2016			December 31, 2015
Foreign currency forwards designated as hedges:
Other current assets	$	246		$	49
Accrued expenses	(179		)	(222		)
Foreign currency forwards not designated as hedges:
Other current assets	168			114
Accrued expenses	(85		)	(196		)
Foreign currency forwards, net	$	150		$	(255	)