Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

v2.4.1.9
Fair Value Measurements
12 Months Ended
Dec. 31, 2014
Fair Value Disclosures [Abstract]  
Fair Value Measurements

13. Fair Value Measurements

The Company applies the provisions of the 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 December 31, 2014 and December 31, 2013:

Fair Value Measurements at Reporting Date Using

 

     Derivative Balance Sheet Location    Significant
Other
Observable
Inputs
(Level 2)
Fair Value at
December 31,
2014
     Significant
Other
Observable
Inputs
(Level 2)
Fair Value at
December 31,
2013
 
          (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    $ 12.3       $ 5.7   

Derivatives not designated as hedging instruments:

        

Foreign exchange currency contracts

   Prepaid expenses and other current assets    $ 2.2       $ 2.3   
     

 

 

    

 

 

 
      $ 14.5       $ 8.0   
     

 

 

    

 

 

 

LIABILITIES:

        

Derivatives designated as hedging instruments:

        

Foreign exchange currency contracts relating to inventory and intercompany management fee hedges

   Accrued expenses    $ 1.6       $ 4.4   

Derivatives not designated as hedging instruments:

        

Foreign exchange currency contracts

   Accrued expenses    $ 3.8       $ 0.7   
     

 

 

    

 

 

 
      $ 5.4       $ 5.1   
     

 

 

    

 

 

 

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 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 sheet at December 31, 2014 and December 31, 2013:

 

     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, 2014

        

Foreign exchange currency contracts

   $ 14.5       $ (5.4    $ 9.1   
  

 

 

    

 

 

    

 

 

 

Total

   $ 14.5       $ (5.4    $ 9.1   
  

 

 

    

 

 

    

 

 

 

December 31, 2013

        

Foreign exchange currency contracts

   $ 8.0       $ (3.0    $ 5.0   
  

 

 

    

 

 

    

 

 

 

Total

   $ 8.0       $ (3.0    $ 5.0   
  

 

 

    

 

 

    

 

 

 

 

     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, 2014

        

Foreign exchange currency contracts

   $ 5.4       $ (5.4    $   
  

 

 

    

 

 

    

 

 

 

Total

   $ 5.4       $ (5.4    $   
  

 

 

    

 

 

    

 

 

 

December 31, 2013

        

Foreign exchange currency contracts

   $ 5.1       $ (3.0    $ 2.1   
  

 

 

    

 

 

    

 

 

 

Total

   $ 5.1       $ (3.0    $ 2.1   
  

 

 

    

 

 

    

 

 

 

The Company offsets all of its derivative assets and derivative liabilities in its consolidated balance sheet to the extent it maintains master netting arrangements with related financial institutions. As of December 31, 2014 and December 31, 2013, 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.