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Derivatives
 3 Months Ended
Mar. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives

The Company has manufacturing and sales facilities around the world and thus makes investments and conducts business transactions denominated in various currencies. The Company is also exposed to fluctuations in interest rates and commodity price changes. These financial exposures are monitored and managed by the Company as an integral part of its risk management program.

Financial instruments have been used by the Company to hedge its exposure to fluctuations in interest rates. The Company entered into an interest rate swap agreement (the "Swap") on April 28, 2017, with one bank, which converts the interest on the first $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.92% plus the borrowing spread. The Swap expires on January 31, 2022 and is accounted for as a cash flow hedge.

The Company also uses financial instruments to hedge its exposures to fluctuations in foreign currency exchange rates. The Company has various contracts outstanding which primarily hedge recognized assets or liabilities and anticipated transactions in various currencies including the Euro, British pound sterling, U.S. dollar, Canadian dollar, Japanese yen, Singapore dollar, Korean won, Swedish kroner, Chinese renminbi, Mexican peso, Hong Kong dollar and Swiss franc. Certain foreign currency derivative instruments are treated as cash flow hedges of forecasted transactions. All foreign exchange contracts are due within two years.

The Company does not use derivatives for speculative or trading purposes or to manage commodity exposures. Changes in the fair market value of derivatives that qualify as cash flow hedges are recorded to accumulated other non-owner changes to equity. Amounts recorded to accumulated other non-owner changes to equity are reclassified to earnings in a manner that
matches the earnings impact of the hedged transaction. Amounts related to contracts that are not designated as hedges are recorded directly to earnings.

The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. Other financing cash flows during the first three months of 2020 and 2019, as presented on the Consolidated Statements of Cash Flows, include $7,212 and $1,299, respectively, of net cash payments related to the settlement of foreign currency hedges related to intercompany financing.

The following table sets forth the fair value amounts of derivative instruments held by the Company:
 
Derivative Assets
 
Derivative Liabilities
 
 
Fair Value
 
 
Fair Value
 
Balance Sheet Location
March 31, 2020
December 31, 2019
 
Balance Sheet Location
March 31, 2020
December 31, 2019
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Interest rate contracts
Other assets
$
—

$
—

 
Other liabilities
$
(3,042
)
$
(820
)
Foreign exchange contracts
Prepaid expenses and other current assets
—

700

 
Accrued liabilities
(635
)
—

Total derivatives designated as hedging instruments
 
—

700

 
 
(3,677
)
(820
)
 
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts
Prepaid expenses and other current assets
6

1,375

 
Accrued liabilities
(846
)
(1
)
Total derivatives not designated as hedging instruments
 
6

1,375

 
 
(846
)
(1
)
 
 
 
 
 
 
 
 
Total derivatives
 
$
6

$
2,075

 
 
$
(4,523
)
$
(821
)


The following table sets forth the effect of hedge accounting on accumulated other comprehensive (loss) income for the three month periods ended March 31, 2020 and 2019:

 
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivative
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
 
Three Months Ended
March 31,
 
Three Months Ended
March 31,
Derivatives in Hedging Relationships
2020
 
2019
 
2020
 
2019
Derivatives in Cash Flow Hedging Relationships:
 
 
 
 
 
 
 
 
Interest rate contracts
$
(1,694
)
 
$
(487
)
 
Interest expense
$
(61
)
 
$
142

Foreign exchange contracts
(643
)
 
(81
)
 
Net sales
(523
)
 
(337
)
Total
$
(2,337
)
 
$
(568
)
 
 
$
(584
)
 
$
(195
)


The following table sets forth the effect of hedge accounting on the consolidated statements of income for the three-month periods ended March 31, 2020 and 2019:

 
Location and Amount of Gain (Loss) Recognized in Income on Hedging Relationships
 
Three Months Ended
March 31,
 
2020
 
2019
 
Net sales
 
Interest expense
 
Net sales
 
Interest expense
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of hedges are recorded
$
330,671

 
$
4,324

 
$
376,692

 
$
5,113

The effects of hedging:
 
 
 
 
 
 
 
  Gain (Loss) on cash flow hedging relationships
 
 
 
 
 
 
 
     Interest rate contracts
 
 
 
 
 
 
 
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
 
 
(61
)
 
 
 
142

     Foreign exchange contracts
 
 
 
 
 
 
 
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income
(523
)
 
 
 
(337
)
 




The following table sets forth the effect of derivatives not designated as hedging instruments on the consolidated statements of income for the three-month periods ended March 31, 2020 and 2019:
 
Location of Gain (Loss) Recognized in Income on Derivative
Amount of Gain (Loss) Recognized in Income on Derivative(A)
 
Three Months Ended
March 31,
Derivatives Not Designated as Hedging Instruments
2020
 
2019
Foreign exchange contracts
Other expense (income), net
$
(12,195
)
 
$
(3,819
)


(A) Such amounts were substantially offset by the net (gain) loss recorded on the underlying hedged asset or liability, also recorded in other expense (income), net.