Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.3.0.814
Fair Value Measurements
9 Months Ended
Sep. 30, 2015
Fair Value Disclosures [Abstract]  
Fair Value Measurements

12. Fair Value Measurements

The Company applies the provisions of the FASB Accounting Standards Codification, or ASC, Topic 820, Fair Value Measurements and Disclosures, or ASC 820, for its financial and non-financial assets and liabilities. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 inputs are unobservable inputs for the asset or liability.

The Company measures certain assets and liabilities at fair value as discussed throughout the notes to its consolidated financial statements. Foreign exchange currency contracts are valued using standard calculations and models primarily based on inputs such as observable forward rates, spot rates and foreign currency exchange rates at the reporting period ended date. The Company’s derivative assets and liabilities are measured at fair value and consisted of Level 2 inputs and their amounts are shown below at their gross values at September 30, 2015 and December 31, 2014:

Fair Value Measurements at Reporting Date

 

 

 

Derivative Balance

Sheet

Location

 

Significant Other

Observable

Inputs

(Level 2)

Fair Value at

September 30,

2015

 

 

Significant Other

Observable

Inputs

(Level 2)

Fair Value at

December 31,

2014

 

 

 

 

 

(in millions)

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging

   instruments:

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts relating to

   inventory and intercompany management fee

   hedges

 

Prepaid expenses and

other current assets

 

$

5.7

 

 

$

12.3

 

Derivatives not designated as hedging

   instruments:

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

Prepaid expenses and

other current assets

 

$

9.4

 

 

$

2.2

 

 

 

 

 

$

15.1

 

 

$

14.5

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging

   instruments:

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts relating to

   inventory and intercompany management fee

   hedges

 

Accrued expenses

 

$

1.1

 

 

$

1.6

 

Derivatives not designated as hedging

   instruments:

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

Accrued expenses

 

$

5.9

 

 

$

3.8

 

 

 

 

 

$

7.0

 

 

$

5.4

 

 

The Company’s deferred compensation plan assets consist of Company owned life insurance policies. As these policies are recorded at their cash surrender value, they are not required to be included in the fair value table above. See Note 6, Employee Compensation Plans, to the Company’s 2014 10-K for a further description of its deferred compensation plan assets.

The following tables summarize the offsetting of the fair values of the Company’s derivative assets and derivative liabilities for presentation in the Company’s condensed consolidated balance sheet at September 30, 2015 and December 31, 2014:

 

 

 

Offsetting of Derivative Assets

 

 

 

Gross

Amounts of

Recognized

Assets

 

 

Gross

Amounts

Offset in the

Balance Sheet

 

 

Net Amounts

of Assets

Presented in

the Balance

Sheet

 

 

 

(In millions)

 

September 30, 2015

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

$

15.1

 

 

$

(6.9

)

 

$

8.2

 

Total

 

$

15.1

 

 

$

(6.9

)

 

$

8.2

 

December 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

$

14.5

 

 

$

(5.4

)

 

$

9.1

 

Total

 

$

14.5

 

 

$

(5.4

)

 

$

9.1

 

 

 

 

Offsetting of Derivative Liabilities

 

 

 

Gross

Amounts of

Recognized

Liabilities

 

 

Gross

Amounts

Offset in the

Balance Sheet

 

 

Net Amounts

of Liabilities

Presented in

the Balance

Sheet

 

 

 

(In millions)

 

September 30, 2015

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

$

7.0

 

 

$

(6.9

)

 

$

0.1

 

Total

 

$

7.0

 

 

$

(6.9

)

 

$

0.1

 

December 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

$

5.4

 

 

$

(5.4

)

 

$

 

Total

 

$

5.4

 

 

$

(5.4

)

 

$

 

 

The Company offsets all of its derivative assets and derivative liabilities in its condensed consolidated balance sheet to the extent it maintains master netting arrangements with related financial institutions. As of September 30, 2015, and December 31, 2014, all of the Company’s derivatives were subject to master netting arrangements and no collateralization was required for the Company’s derivative assets and derivative liabilities.