Financial instruments

The Company uses derivative instruments for risk management purposes. Foreign currency forward contracts are used to manage foreign currency transaction exposure. These derivative instruments are designated as cash flow hedges and are recorded on the balance sheet at fair market value. The effective portion of the gains or losses on derivatives is reported as a component of other comprehensive income and thereafter is recognized in the consolidated statement of income (loss) in the period or periods during which the hedged transaction affects earnings. Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in the consolidated statement of income (loss) in the period in which such gains and losses occur. As of December 31, 2014 and 2013, the Company had no open foreign currency forward contracts.

The following table provides information as to the gains and losses attributable to derivatives in cash flow hedging relationships that were reported in other comprehensive income (“OCI”) for the years ended December 31, 2014, 2013 and 2012:



	After Tax Gain/(Loss) Recognized in OCI
	2014		2013		2012
	(Dollars in thousands)
Interest rate swap	$	—	$	—	$	7,032
Foreign currency exchange contracts	—		381		(156		)
Total	$	—	$	381	$	6,876

See Note 11 to the consolidated financial statements for information on the location and amount of gains and losses attributable to derivatives that were reclassified from accumulated other comprehensive income (“AOCI”) to expense (income), net of tax.

For the years ended December 31, 2014, 2013 and 2012, there was no ineffectiveness related to the Company’s derivatives.

During 2012, the Company entered into forward exchange contracts for Singapore dollars and U.S. dollars in anticipation of its acquisition of the LMA business. In accordance with applicable accounting guidance, a forecasted transaction is not eligible for hedge accounting if the forecasted transaction involves a business combination. Therefore, gains and losses relating to this arrangement were recognized as incurred. The Company realized a pre-tax loss of $7.6 million upon settlement of the forward exchange contracts in 2012.

In 2011, the Company terminated its interest rate swap covering a notional amount of $350 million designated as a hedge against the variability of the cash flows in the interest payments under the Company's previously outstanding term loan. During 2012, all remaining losses associated with this interest rate swap were reclassified from AOCI to the consolidated statement of income.

Concentration of Credit Risk

Concentration of credit risk with respect to trade accounts receivable is generally limited due to the Company’s large number of customers and their diversity across many geographic areas. A portion of the Company’s trade accounts receivable outside the United States, however, include sales to government-owned or supported healthcare systems in several countries which are subject to payment delays. Payment is dependent upon the financial stability and creditworthiness of those countries’ economies.

In the ordinary course of business, the Company grants non-interest bearing trade credit to customers on normal credit terms. In an effort to reduce its credit risk, the Company (i) establishes credit limits for all of its customer relationships, (ii) performs ongoing credit evaluations of its customers’ financial condition, (iii) monitors the payment history and aging of its customers’ receivables, and (iv) monitors open orders against an individual customer’s outstanding receivable balance.

An allowance for doubtful accounts is maintained for accounts receivable based on the Company’s historical collection experience and expected collectability of the accounts receivable, considering the period an account is outstanding, the financial position of the customer and information provided by credit rating services. The adequacy of this allowance is reviewed each reporting period and adjusted as necessary. The allowance for doubtful accounts was $8.8 million and $10.7 million at December 31, 2014 and 2013, respectively. The current portion of the allowance for doubtful accounts at December 31, 2014 and 2013 of $2.4 million and $5.2 million, respectively, is presented as part of accounts receivable, net. The allowance for doubtful accounts on receivables outstanding for greater than one year at December 31, 2014 and 2013 of $6.4 million and $5.5 million, respectively, is presented as part of other assets.

In light of the disruptions in global economic markets, the Company instituted enhanced measures, within countries for which the Company has collectability concerns, to facilitate customer-by-customer risk assessment when estimating the allowance for doubtful accounts. Such measures included, among others, monthly credit control committee meetings, at which customer credit risks are identified after review of, among other things, accounts that exceed specified credit limits, payment delinquencies and other customer issues. In addition, with respect to certain of the Company’s non-government customers, the Company instituted measures designed to reduce its risk exposures, including issuing dunning letters, reducing credit limits, requiring that payments accompany orders and instituting legal action with respect to delinquent accounts. With respect to government customers, the Company evaluates receivables for potential collection risks associated with any limitations on the availability of government funding and reimbursement practices.

Certain of the Company’s customers, particularly in Europe, have extended or delayed payments for products and services already provided, resulting in potential collectability concerns regarding the Company's accounts receivable from these customers, for the most part in Greece, Italy, Spain and Portugal. If the financial condition of these customers or the healthcare systems in these countries deteriorate to the extent that the ability of an increasing number of customers to make payments is uncertain, additional allowances may be required in future periods. The aggregate net current and long-term accounts receivable for customers in Spain, Italy, Greece and Portugal and the percentage of the Company’s total net current and long-term accounts receivable represented by the net current and long-term accounts receivables for customers in those countries at December 31, 2014 and 2013 are as follows:



	December 31, 2014			December 31, 2013
	(Dollars in thousands)
Current and long-term accounts receivable (net of allowances of $8.1 million and $7.9 million in 2014 and 2013, respectively) in Spain, Italy, Greece and Portugal ⁽¹⁾	$	76,190		$	97,852
Percentage of total net current and long-term accounts receivables	27.3		%	31.0		%

(1) The long-term portion of accounts receivable, net from customers in Spain, Italy, Greece and Portugal at December 31, 2014 and 2013 was $11.3 million and $17.6 million, respectively, and is reported in other assets.

For the years ended December 31, 2014, 2013 and 2012, net revenues from customers in Spain, Italy, Greece and Portugal were $150.5 million, $142.6 million and $132.5 million, respectively.