Derivative Financial Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Foreign Currency Exchange Rate Risk

The Company enters into foreign currency forward contracts not formally designated as hedges to manage the consolidated exchange rate risk associated with the remeasurement of non-functional currency denominated monetary assets and liabilities.  Non-functional currency denominated monetary assets and liabilities consist primarily of cash, receivables, payables and intercompany loans. The Company manages exposure to counterparty non-performance credit risk by entering into foreign currency forward contracts only with major financial institutions that are expected to fully perform under the terms of such contracts. Changes in fair value of foreign currency forward contracts are recognized in income at the end of each reporting period based on the difference between the contract rate and the spot rate. The net amount of the gains and losses related to derivative instruments recorded in other expense (income), net for the year ended December 31, 2016, 2015 and 2014 were a loss of $5.3 million, $6.7 million and $8.3 million, respectively.

Note 3.        Derivative Financial Instruments - (Continued)

Foreign Currency Exchange Rate Risk - (Continued)

In general, these gains and losses are offset in the Consolidated Statements of Income by the reciprocal gains and losses from the underlying assets or liabilities which originally gave rise to the exposure.

Notional amounts are used to measure the volume of foreign currency forward contracts and do not represent the Company's total exposure to foreign currency gains or losses. The table below presents the net notional amounts of the Company’s outstanding foreign currency forward contracts by currency at December 31, 2016 and 2015 (in thousands):

	Year Ended December 31,
	2016		2015
European euro	$	156,352	$	281
Swedish kroner	48,555		59,198
British pound sterling	33,862		10,203
Canadian dollar	15,645		10,799
Japanese yen	3,251		2,124
Brazilian real	2,747		6,440
Australian dollar	1,653		2,342
Other	—		526
	$	262,065	$	91,913

At December 31, 2016, the Company’s foreign currency forward contracts, in general, had maturities of three months or less.

The carrying amount of the foreign exchange contracts included in the Consolidated Balance Sheets are as follows (in thousands):

	December 31, 2016				December 31, 2015
	Prepaid Expenses and Other Current Assets		Other Current Liabilities		Prepaid Expenses and Other Current Assets		Other Current Liabilities
Foreign exchange contracts	$	2,369	$	75	$	767	$	1,314

Interest Rate Swap Contracts

The Company's outstanding debt at December 31, 2016 consists of fixed rate notes and a floating rate unsecured credit facility. The Company maintains its floating rate revolver for flexibility to fund working capital needs and for other uses of cash. Interest expense on the Company's floating rate debt is typically calculated based on a fixed spread over a reference rate, such as LIBOR (also known as the Eurocurrency rate). Therefore, fluctuations in market interest rates will cause interest expense increases or decreases on a given amount of floating rate debt.

The Company is managing its interest rate risk related to floating rate debt through interest rate swaps in which the Company receives floating rate payments and makes fixed rate payments. The impact of the interest rate swaps is to fix the floating rate basis for the calculation of interest on the unsecured credit facility at the levels indicated in the table below. The effective interest rate paid is equal to the fixed rates shown below plus the credit spread then in effect. At December 31, 2016, the effective interest rate on the borrowings made from the Company's revolving credit facility was 2.37 percent. As of December 31, 2016, the following interest rate swaps were outstanding:

Contract Date	Notional Amount (in millions)		Fixed Rate		Effective Date	Maturity Date
March 15, 2013	$	46.9	1.02	%	April 5, 2013	March 31, 2019
March 29, 2013	$	46.9	0.97	%	April 5, 2013	March 31, 2019

Note 3. Derivative Financial Instruments - (Continued)

Interest Rate Swap Contracts - (Continued)

These interest rate swaps are designated and effective as cash flow hedges and are recorded as an asset or liability in the Company's Consolidated Balance Sheets at fair value. Fair value adjustments are recorded as an adjustment to accumulated other comprehensive earnings (loss), except that any gains and losses on ineffectiveness of the interest rate swaps would be recorded as an adjustment to other (income) expense, net. The net fair value carrying amount of the Company's interest rate swaps was $0.3 million, all of which has been recorded to other assets in the Consolidated Balance Sheet as of December 31, 2016.