DERIVATIVES

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial for each of the three years in the period ended December 31, 2019.

The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at December 31, 2019. The Company does not expect any counterparties to fail to meet their obligations.

Cash flow hedges

Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $59,982 at December 31, 2019 and $45,909 at December 31, 2018.

Fair value hedges

Certain interest rate swap agreements are qualified and designated as fair value hedges. At December 31, 2019, the Company had interest rate swap agreements outstanding that effectively convert notional amounts of $50,000 of debt from a fixed interest rate to a variable interest rate based on three-month LIBOR plus a spread of between 0.5% and 0.6%. The variable rates reset every three months, at which time payment or receipt of interest will be settled.

Net investment hedges

The Company has cross currency swaps that are qualified and designated as net investment hedges. The dollar equivalent gross notional amount of these contracts is $50,000 as of December 31, 2019.

Derivatives not designated as hedging instruments

The Company has certain foreign exchange forward contracts which are not designated as hedges. These derivatives are held as hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $363,820 at December 31, 2019 and $328,534 at December 31, 2018.

Fair values of derivative instruments in the Company's Consolidated Balance Sheets follow:



	December 31, 2019								December 31, 2018
Derivatives by hedge designation	Other Current Assets		Other Current Liabilities		Other Assets		Other Liabilities		Other Current Assets		Other Current Liabilities		Other Assets		Other Liabilities
Designated as hedging instruments:
Foreign exchange contracts	$	1,288	$	522	$	—	$	—	$	647	$	404	$	—	$	—
Interest rate swap agreements	—		—		2,964		—		—		—		302		7,033
Cross currency swap agreements	—		—		—		653		—		—		—		—
Not designated as hedging instruments:
Foreign exchange contracts	2,397		973		—		—		6,375		829		—		—
Total derivatives	$	3,685	$	1,495	$	2,964	$	653	$	7,022	$	1,233	$	302	$	7,033

The effects of undesignated derivative instruments on the Company's Consolidated Statements of Income consisted of the following:



		Year Ended December 31,
Derivatives by hedge designation	Classification of gains	2019		2018
Not designated as hedges:
Foreign exchange contracts	Selling, general & administrative expenses	$	13,154	$	7,452

The effects of designated cash flow hedges on AOCI and the Company's Consolidated Statements of Income consisted of the following:



	December 31,
Total gain (loss) recognized in AOCI, net of tax	2019		2018
Foreign exchange contracts	$	620	$	173
Net investment hedges	1,006		1,521

The Company expects a gain of $620 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized.



		Year Ended December 31,
Derivative type	Gain (loss) reclassified from AOCI to:	2019		2018
Foreign exchange contracts	Net sales	$	975	$	(225	)
	Cost of goods sold	454		(3		)