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Derivative Instruments and Hedging Activities | 12 Months Ended
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Dec. 28, 2013
Derivative Instruments and Hedging Activities [Abstract] |
Derivative Instruments and Hedging Activities | Note 13 – Derivative Instruments and Hedging Activities Cash Flow Hedges Copper and brass represent the largest component of the Company’s variable costs of production. The cost of these materials is subject to global market fluctuations caused by factors beyond the Company’s control. The Company occasionally enters into forward fixed-price arrangements with certain customers; the risk of these arrangements is generally managed with commodity futures contracts. The Company accounts for these futures contracts in accordance with ASC 815. These futures contracts have been designated as cash flow hedges. The fair value of open futures contracts are recognized as a component of OCI until the position is closed which corresponds to the period when the related hedged transaction is recognized in earnings. Should these contracts no longer meet hedge criteria in accordance with ASC 815, either through lack of effectiveness or because the hedged transaction is no longer probable of occurring, all deferred gains and losses related to the hedge would be immediately reclassified from accumulated OCI into earnings. In the next twelve months, the Company will reclassify into earnings realized gains or losses of cash flow hedges; at December 28, 2013, this amount was a $408 thousand gain position. At December 28, 2013, the Company held open futures contracts to purchase approximately $15.9 million of copper over the next 15 months related to fixed price sales orders. The fair value of those futures contracts was a $438 thousand gain position, which was determined by obtaining quoted market prices (Level 1 hierarchy as defined by ASC 820). Derivative instruments designated as cash flow hedges under ASC 815 are reflected in the Consolidated Financial Statements as follows:
| December 28, 2013 |
(In thousands) | Location |  | Fair value |
Commodity contracts | Other current assets: | Gain positions |  | $ | 448 |
|  | Loss positions |  |  | (10 | )
| December 29, 2012 |
(In thousands) | Location |  | Fair value |
Commodity contracts | Other current liabilities: | Gain positions |  | $ | 172 |
|  | Loss positions |  |  | (420 | )
The following tables summarize activities related to the Company’s derivative instruments classified as cash flow hedges in accordance with ASC 815:
| Loss Recognized in Accumulated OCI (Effective Portion), Net of Tax |
|  | For the Year Ended |
(In thousands) |  | December 28, 2013 |  |  | December 29, 2012 |
Commodity contracts |  | $ | (3,904 | ) |  | $ | (214 | )
| Loss Reclassified from Accumulated OCI into Income (Effective Portion), Net of Tax |
|  |  | For the Year Ended |
(In thousands) | Location |  | December 28, 2013 |  |  | December 29, 2012 |
Commodity contracts | Cost of goods sold |  | $ | 3,781 |  |  | $ | 469 |
Inventory Fair Value Hedges The Company enters into futures contracts in order to protect the value of inventory against market fluctuations. These futures contracts are assessed and designated as fair value hedges in accordance with ASC 815. At December 28, 2013, the Company held open futures contracts to sell approximately $70.6 million of copper over the next five months related to copper inventory. The fair value of those futures contracts was a $1.8 million loss position, which was determined by obtaining quoted market prices (Level 1 hierarchy as defined by ASC 820). During the fourth quarter of 2013, the Company dedesignated previous hedges on its inventory because the hedging relationship was no longer deemed to be highly effective. These contracts no longer qualify as hedging instruments. Derivative commodity instruments are reflected in the Consolidated Financial Statements as follows:
| December 28, 2013 |
(In thousands) | Location |  | Fair Value |
Commodity contracts - Nonqualifying | Other current liabilities: | Gain positions |  | $ | 318 |
|  | Loss positions |  |  | (2,057 | )
Commodity contracts - Qualifying | Other current liabilities: | Gain positions |  |  | 22 |
|  | Loss positions |  |  | (50 | )
| December 29, 2012 |
(In thousands) | Location |  | Fair Value |
Commodity contracts - Qualifying | Other current assets: | Gain positions |  | $ | 1,047 |
|  | Loss positions |  |  | (548 | )
Gains and losses related to the change in the value of the commodity contracts, the change in the value of the inventory being hedged, and hedge ineffectiveness are recorded in cost of goods sold. During 2013 and 2012, gains of $0.3 million and losses of $0.1 million, respectively, were recorded. Also, as a result of the Company’s dedesignation of previous hedges on its inventory during the fourth quarter of 2013, a net loss of $0.6 million was recorded in current earnings to record these contracts at fair value at the end of 2013. The following tables summarize the gains (losses) on the Company’s inventory fair value hedges:
| Gains (Losses) on Fair Value Hedges for the Year Ended December 28, 2013 |
(In thousands) | Location |  | Amount |
Gain on the derivatives designated and qualifying as fair value hedges: |  |  |  |
Commodity Contracts | Cost of goods sold |  | $ | 5,115 |
(Loss) on the hedged items designated and qualifying as fair value hedges: |  |  |  |  |
Inventory | Cost of goods sold |  |  | (4,827 | )
| (Losses) Gains on Fair Value Hedges for the Year Ended December 29, 2012 |
(In thousands) | Location |  | Amount |
(Loss) on the derivatives in designated and qualifying fair value hedges: |  |  |  |
Commodity Contracts | Cost of goods sold |  | $ | (301 | )
Gain on the hedged item in designated and qualifying fair value hedges: |  |  |  |  |
Inventory | Cost of goods sold |  |  | 182 |
Foreign Currency Hedges During 2012 and 2013, the Company entered into contracts to purchase heavy machinery and equipment. These contracts are denominated in euros. In anticipation of entering into these contracts, the Company has entered into forward contracts to purchase euros to protect itself against adverse exchange rate fluctuations. The fair value of open contracts are recognized as a component of OCI until the position is closed which corresponds to the period when the related hedged transaction is recognized in earnings. Should these contracts no longer meet hedge criteria in accordance with ASC 815, either through lack of effectiveness or because the hedged transaction is no longer probable of occurring, all deferred gains and losses related to the hedge would be immediately reclassified from accumulated OCI into earnings. At December 28, 2013, the Company held open forward contracts to purchase approximately 10.5 million euros over the next 15 months. The fair value of these contracts, which was determined by obtaining quoted market prices (Level 1 hierarchy as defined by ASC 820), was an $836 thousand gain position recorded in other current assets at December 28, 2013. The following tables summarize activities related to the Company’s derivative instruments classified as foreign currency hedges in accordance with ASC 815:
| Loss Recognized in Accumulated OCI (Effective Portion), Net of Tax |
|  | For the Year Ended |
(In thousands) |  | December 28, 2013 |  |  | December 29, 2012 |
Foreign currency contracts |  | $ | (484 | ) |  | $ | — |
| Loss Reclassified from Accumulated OCI into Income (Effective Portion), Net of Tax |
|  |  | For the Year Ended |
(In thousands) | Location |  | December 28, 2013 |  |  | December 29, 2012 |
Commodity contracts | Cost of goods sold |  | $ | 34 |  |  | $ | — |
Interest Rate Swap On February 20, 2013, the Company entered into a two-year forward-starting interest rate swap agreement with an effective date of January 12, 2015, and an underlying notional amount of $200.0 million, pursuant to which the Company receives variable interest payments based on one-month LIBOR and pays fixed interest at a rate of 1.4 percent. Based on the Company’s current variable premium pricing on its Term Loan Facility, the all-in fixed rate on the effective date is 2.7 percent. The interest rate swap will mature on December 11, 2017, and is structured to offset the interest rate risk associated with the Company’s floating-rate, LIBOR-based Term Loan Facility Agreement. The swap was designated and accounted for as a cash flow hedge from inception. The fair value of the interest rate swap is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rate and the expected cash flows at the current market interest rate using observable benchmarks for LIBOR forward rates at the end of the period (Level 2 hierarchy as defined by ASC 820). The effective portion of the mark-to-market gain or loss is reported as a component of accumulated OCI and subsequently reclassified into earnings when the hedged transactions occur and affect earnings. Interest payable and receivable under the swap agreement will be accrued and recorded as an adjustment to interest expense. The fair value of the interest rate swap was a $1.3 million gain position and was recorded in other assets at December 28, 2013. The following tables summarize the activity related to the interest rate swap:
| Gain Recognized in Accumulated OCI (Effective Portion), Net of Tax |
|  | For the Year Ended |
(In thousands) |  | December 28, 2013 |  |  | December 29, 2012 |
Interest rate swap |  | $ | 834 |  |  | $ | — |
The Company enters into futures and forward contracts that generally closely match the terms of the underlying transactions. As a result, the ineffective portion of the open cash flow and fair value hedge contracts through December 28, 2013 was not material to the Consolidated Statements of Income. The Company does not offset the fair value of amounts for derivative instruments and the fair value amounts recognized for the right to reclaim cash collateral. At December 28, 2013, the Company had recorded restricted cash of $2.1 million related to open futures contracts.

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- Definition The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80748-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624181-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41635-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708773-113959 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624258-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5618551-113959 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624163-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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