Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v2.4.1.9
Fair Value Measurements
3 Months Ended
Mar. 31, 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 March 31, 2015 and December 31, 2014:

Fair Value Measurements at Reporting Date

 

    Derivative Balance
Sheet
Location
  Significant
Other
Observable
Inputs
(Level 2)
Fair Value at
March 31,
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
  $ 18.2      $ 12.3   

Derivatives not designated as hedging instruments:

     

Foreign exchange currency contracts

  Prepaid expenses and other
current assets
  $ 2.5      $ 2.2   
   

 

 

   

 

 

 
$ 20.7    $ 14.5   
   

 

 

   

 

 

 

LIABILITIES:

Derivatives designated as hedging instruments:

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

Accrued expenses $ 6.1    $ 1.6   

Derivatives not designated as hedging instruments:

Foreign exchange currency contracts

Accrued expenses $ 2.6    $ 3.8   
   

 

 

   

 

 

 
$ 8.7    $ 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 March 31, 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)  

March 31, 2015

        

Foreign exchange currency contracts

   $ 20.7       $ (7.8    $ 12.9   
  

 

 

    

 

 

    

 

 

 

Total

$ 20.7    $ (7.8 $ 12.9   
  

 

 

    

 

 

    

 

 

 

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)  

March 31, 2015

        

Foreign exchange currency contracts

   $ 8.7       $ (7.8    $ 0.9   
  

 

 

    

 

 

    

 

 

 

Total

$ 8.7    $ (7.8 $ 0.9   
  

 

 

    

 

 

    

 

 

 

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 March 31, 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.