Derivatives

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company has manufacturing and sales facilities around the world and thus makes investments and conducts business transactions denominated in various currencies. The Company is also exposed to fluctuations in interest rates and commodity price changes. These financial exposures are monitored and managed by the Company as an integral part of its risk management program.

Financial instruments have been used by the Company to hedge its exposure to fluctuations in interest rates. The Company entered into an interest rate swap agreement (the "Swap") on April 28, 2017 with one bank, which converts the interest on the first $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.92% plus the borrowing spread. The Swap expires on January 31, 2022. The Swap was accounted for as a cash flow hedge. The Swap remained in place at December 31, 2020.

The Company also uses financial instruments to hedge its exposures to fluctuations in foreign currency exchange rates. The Company has various contracts outstanding which primarily hedge recognized assets or liabilities and anticipated transactions in various currencies including the Euro, British pound sterling, U.S. dollar, Canadian dollar, Japanese yen, Singapore dollar, Korean won, Swedish kroner, Chinese renminbi, Mexican peso, Hong Kong dollar and Swiss franc. Certain foreign currency derivative instruments are treated as cash flow hedges of forecasted transactions. All foreign exchange contracts are due within two years.

The Company does not use derivatives for speculative or trading purposes or to manage commodity exposures. Changes in the fair market value of derivatives that qualify as cash flow hedges are recorded to accumulated other non-owner changes to equity. Amounts recorded to accumulated other non-owner changes to equity are reclassified to earnings in a manner that matches the earnings impact of the hedged transaction. Amounts related to contracts that are not designated as hedges are recorded directly to earnings.

The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. Other financing cash flows during the years ended December 31, 2020, 2019 and 2018, as presented on the Consolidated Statements of Cash Flows, include $(5,587), $7,538 and $10,813, respectively, of net cash (proceeds) payments related to the settlement of foreign currency hedges related to intercompany financing.

The following table sets forth the fair value amounts of derivative instruments held by the Company:


	Derivative Assets					Derivative Liabilities
		Fair Value					Fair Value
	Balance Sheet Location	December 31, 2020		December 31, 2019		Balance Sheet Location	December 31, 2020		December 31, 2019
Derivatives designated as hedging instruments:
Interest rate contracts	Other assets	$	—	$	—	Other liabilities	$	(1,977)	$	(820)
Foreign exchange contracts	Prepaid expenses and other current assets	908		700		Accrued liabilities	—		—
Total derivatives designated as hedging instruments		908		700			(1,977)		(820)

Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	734		1,375		Accrued liabilities	(11)		(1)
Total derivatives not designated as hedging instruments		734		1,375			(11)		(1)

Total derivatives		$	1,642	$	2,075		$	(1,988)	$	(821)

The following table sets forth the effect of hedge accounting on accumulated other comprehensive (loss) income for the twelve month periods ended December 31, 2020, 2019 and 2018:


	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivative						Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
	Twelve Months Ended December 31,							Twelve Months Ended December 31,
Derivatives in Hedging Relationships	2020		2019		2018			2020		2019		2018
Derivatives in Cash Flow Hedging Relationships:
Interest rate contracts	$	(882)	$	(1,702)	$	578	Interest expense	$	(1,321)	$	347	$	(277)
Foreign exchange contracts	240		753		95		Net sales	(11)		(956)		(1,116)
Total	$	(642)	$	(949)	$	673		$	(1,332)	$	(609)	$	(1,393)

The following table sets forth the effect of hedge accounting on the consolidated statements of income for the twelve month periods ended December 31, 2020, 2019 and 2018:


	Location and Amount of Gain (Loss) Recognized in Income on Hedging Relationships
	Twelve Months Ended December 31,
	2020				2019				2018
	Net sales		Interest expense		Net sales		Interest expense		Net sales		Interest expense
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of hedges are recorded	$	1,124,391	$	15,944	$	1,491,118	$	20,629	$	1,495,889	$	16,841
The effects of hedging:
Gain (Loss) on cash flow hedging relationships
Interest rate contracts
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income			(1,321)				347				(277)
Foreign exchange contracts
Amount of loss reclassified from accumulated other comprehensive income (loss) into income	(11)				(956)				(1,116)

The following table sets forth the effect of derivatives not designated as hedging instruments on the consolidated statements of income for the twelve month periods ended December 31, 2020, 2019 and 2018:


	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative(A)
		Twelve Months Ended December 31,
Derivatives Not Designated as Hedging Instruments		2020		2019		2018
Foreign exchange contracts	Other expense (income), net	$	5,631	$	(8,250)	$	(12,162)

(A) During 2020 and 2018, such gains (losses) were substantially offset by net losses (gains) recorded on the underlying hedged asset or liability (the "underlying"). During 2019, approximately half of the loss recognized was offset by a net gain recorded on the underlying. Offsetting net gains or losses on the underlying are also recorded in other expense (income), net.