Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

v3.20.4
Fair Value Measurements
 12 Months Ended
Dec. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements
13. Fair Value Measurements
The Company applies the provisions of FASB 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 and interest rate swaps are valued using standard calculations and models. Foreign exchange currency contracts are valued primarily based on inputs such as observable forward rates, spot rates, and foreign currency exchange rates at the reporting period ended date. Interest rate swaps are valued primarily based on inputs such as LIBOR and swap yield curves 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, 2020 and 2019:
 
 
  
Significant Other
Observable
Inputs (Level 2)
Fair Value as of
December 31,

2020
  
Significant Other
Observable
Inputs (Level 2)
Fair Value as of
December 31,

2019
  
Balance Sheet Location
 
  
(in millions)
  
 
ASSETS:
   
 
         
 
           
Derivatives designated as hedging instruments:
   
 
         
 
           
Foreign exchange currency contracts relating to inventory and intercompany management fee hedges
   
 
 $ —       
 
 $ 0.1      Prepaid expenses and other current assets
Derivatives not designated as hedging instruments:
   
 
         
 
           
Foreign exchange currency contracts
   
 
   9.4     
 
   3.1      Prepaid expenses and other current assets
    
 
 
 
     
 
 
 
       
    
 
 $ 9.4     
 
 $ 3.2       
    
 
 
 
     
 
 
 
       
LIABILITIES:
   
 
         
 
           
Derivatives designated as hedging instruments:
   
 
         
 
           
Foreign exchange currency contracts relating to inventory and intercompany management fee hedges
   
 
 $ 3.9     
 
 $ 1.9      Other current liabilities
Interest rate swaps
   
 
   1.0     
 
   —        Other current liabilities
Derivatives not designated as hedging instruments:
   
 
         
 
           
Foreign exchange currency contracts
   
 
   3.2     
 
   1.1      Other current liabilities
    
 
 
 
     
 
 
 
       
    
 
 $ 8.1     
 
 $ 3.0       
    
 
 
 
     
 
 
 
       
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 sheets as of December 31, 2020 and 2019:
 
 
  
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, 2020
   
 
         
 
         
 
      
Foreign exchange currency contracts
   
 
 $ 9.4     
 
 $ (1.8 )    
 
 $ 7.6  
    
 
 
 
     
 
 
 
     
 
 
 
  
Total
   
 
 $ 9.4     
 
 $ (1.8 )    
 
 $ 7.6  
    
 
 
 
     
 
 
 
     
 
 
 
  
December 31, 2019
   
 
         
 
         
 
      
Foreign exchange currency contracts
   
 
 $ 3.2     
 
 $ (1.4 )    
 
 $ 1.8  
    
 
 
 
     
 
 
 
     
 
 
 
  
Total
   
 
 $ 3.2     
 
 $ (1.4 )    
 
 $ 1.8  
    
 
 
 
     
 
 
 
     
 
 
 
  
 
 
  
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, 2020
   
 
         
 
         
 
      
Foreign exchange currency contracts
   
 
 $ 7.1     
 
 $ (1.8 )    
 
 $ 5.3  
Interest rate swaps
   
 
   1.0     
 
   —       
 
   1.0  
    
 
 
 
     
 
 
 
     
 
 
 
  
Total
   
 
 $ 8.1     
 
 $ (1.8 )    
 
 $ 6.3  
    
 
 
 
     
 
 
 
     
 
 
 
  
December 31, 2019
   
 
         
 
         
 
      
Foreign exchange currency contracts
   
 
 $ 3.0     
 
 $ (1.4 )    
 
 $ 1.6  
    
 
 
 
     
 
 
 
     
 
 
 
  
Total
   
 
 $ 3.0     
 
 $ (1.4 )    
 
 $ 1.6  
    
 
 
 
     
 
 
 
     
 
 
 
  
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, 2020 and 2019, 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.