Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

v3.8.0.1
Fair Value Measurements
12 Months Ended
Dec. 31, 2017
Fair Value Disclosures [Abstract]  
Fair Value Measurements

13. Fair Value Measurements

The Company applies the provisions of 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 as of December 31, 2017 and December 31, 2016:

Fair Value Measurements at Reporting Date Using

 

 

 

Derivative Balance Sheet Location

 

Significant

Other

Observable

Inputs

(Level 2)

Fair Value at

December 31,

2017

 

 

Significant

Other

Observable

Inputs

(Level 2)

Fair Value at

December 31,

2016

 

 

 

 

 

(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

 

$

2.9

 

 

$

4.6

 

Derivatives not designated as hedging

    instruments:

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

Prepaid expenses and other current assets

 

 

2.9

 

 

 

2.8

 

 

 

 

 

$

5.8

 

 

$

7.4

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging

    instruments:

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

    relating to inventory and

    intercompany management fee

    hedges

 

Other current liabilities

 

$

4.0

 

 

$

 

Derivatives not designated as hedging

    instruments:

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

Other current liabilities

 

 

2.6

 

 

 

3.5

 

 

 

 

 

$

6.6

 

 

$

3.5

 

 

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, for a further description of its deferred compensation plan assets. The Company’s CVR liability is measured at fair value and would be categorized within Level 3 of the fair value hierarchy under ASC 820. See Note 8, Shareholders’ (Deficit) Equity, for a further description of the CVR liability.

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 consolidated balance sheets as of December 31, 2017 and December 31, 2016:

 

 

 

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)

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

$

5.8

 

 

$

(4.3

)

 

$

1.5

 

Total

 

$

5.8

 

 

$

(4.3

)

 

$

1.5

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

$

7.4

 

 

$

(3.0

)

 

$

4.4

 

Total

 

$

7.4

 

 

$

(3.0

)

 

$

4.4

 

 

 

 

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)

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

$

6.6

 

 

$

(4.3

)

 

$

2.3

 

Total

 

$

6.6

 

 

$

(4.3

)

 

$

2.3

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange currency contracts

 

$

3.5

 

 

$

(3.0

)

 

$

0.5

 

Total

 

$

3.5

 

 

$

(3.0

)

 

$

0.5

 

 

The Company offsets all of its derivative assets and derivative liabilities in its consolidated balance sheets to the extent it maintains master netting arrangements with related financial institutions. As of December 31, 2017 and December 31, 2016, 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.