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Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2013
Significant Accounting Policies [Abstract] |
Significant Accounting Policies | 2. Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany amounts and transactions have been eliminated in consolidation. Certain prior period amounts in the consolidated financial statements and notes thereto have been reclassified to conform to the current period’s presentation. Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Restricted Cash Restricted cash represents cash transferred to an escrow account for the future settlement of certain earn-out obligations associated with the Tower Light acquisition. See Note 3 - Acquisitions for additional details. Concentration of Credit Risk The Company maintains the majority of its cash in one commercial bank in multiple operating and investment accounts. Balances on deposit are insured by the Federal Deposit Insurance Corporation (FDIC) up to specified limits. Balances in excess of FDIC limits are uninsured. One customer accounted for approximately 11% and 9% of accounts receivable at December 31, 2013 and December 31, 2012, respectively. No one customer accounted for greater than 6%, 7% and 10%, respectively, of net sales during the years ended December 31, 2013, 2012, or 2011. Accounts Receivable Receivables are recorded at their face value amount less an allowance for doubtful accounts. The Company estimates and records an allowance for doubtful accounts based on specific identification and historical experience. The Company writes off uncollectible accounts against the allowance for doubtful accounts after all collection efforts have been exhausted. Sales are generally made on an unsecured basis. Inventories Inventories are stated at the lower of cost or market, with cost determined generally using the first-in, first-out method. Property and Equipment Property and equipment are recorded at cost and are being depreciated using the straight-line method over the estimated useful lives of the assets, which are summarized below (in years). Costs of leasehold improvements are amortized over the lesser of the term of the lease (including renewal option periods) or the estimated useful lives of the improvements.
Land improvements |  |  | 10 – 15 |
Buildings and improvements |  |  | 10 – 40 |
Leasehold improvements |  |  | 7 – 20 |
Machinery and equipment |  |  | 5 – 20 |
Dies and tools |  |  | 3 – 10 |
Vehicles |  |  | 3 – 5 |
Office equipment |  |  | 3 – 10 |
Customer Lists, Patents, and Other Intangible Assets The following table summarizes intangible assets by major category as of December 31, 2013 and 2012:
| Weighted Average |  | 2013 |  | 2012 |
| Amortization Years |  | Cost |  | Accumulated Impairment |  | Amortized Cost |  | Cost |  | Accumulated Impairment |  | Amortized Cost |
Indefinite lived intangible assets Trade names |  |  |  |  |  | $ | 182,585 |  |  | $ | (9,389 | ) |  | $ | 173,196 |  |  | $ | 168,220 |  |  | $ | (9,389 | ) |  | $ | 158,831 |
|  |  |  |  | Cost |  |  | Accumulated Amortization |  |  | Amortized Cost |  |  | Cost |  |  | Accumulated Amortization |  |  | Amortized Cost |
Finite lived intangible assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade names |  |  | 0 |  |  | $ | 8,775 |  |  | $ | (8,775 | ) |  | $ | - |  |  | $ | 8,775 |  |  | $ | (8,775 | ) |  | $ | - |
Customer lists |  |  | 7 |  |  |  | 294,627 |  |  |  | (251,863 | ) |  |  | 42,764 |  |  |  | 273,355 |  |  |  | (235,532 | ) |  |  | 37,823 |
Patents |  |  | 15 |  |  |  | 118,921 |  |  |  | (56,503 | ) |  |  | 62,418 |  |  |  | 118,921 |  |  |  | (48,619 | ) |  |  | 70,302 |
Unpatented technology |  |  | 12 |  |  |  | 13,169 |  |  |  | (9,064 | ) |  |  | 4,105 |  |  |  | 13,165 |  |  |  | (7,696 | ) |  |  | 5,469 |
Software |  |  | 8 |  |  |  | 1,046 |  |  |  | (912 | ) |  |  | 134 |  |  |  | 1,014 |  |  |  | (779 | ) |  |  | 235 |
Non-compete/other |  |  | 2 |  |  |  | 345 |  |  |  | (137 | ) |  |  | 208 |  |  |  | 113 |  |  |  | (34 | ) |  |  | 79 |
Total finite lived intangible assets |  |  |  |  |  | $ | 436,883 |  |  | $ | (327,254 | ) |  | $ | 109,629 |  |  | $ | 415,343 |  |  | $ | (301,435 | ) |  | $ | 113,908 |
Amortization of intangible assets was $25,819, $45,867 and $48,020 in 2013, 2012 and 2011, respectively. During the fourth quarter of 2011, the Company wrote down a certain trade name indefinite-lived intangible asset. See the Goodwill and Other Indefinite-Lived Intangible Assets section for further discussion. Estimated amortization expense each year for the five years subsequent to December 31, 2013 is as follows: 2014, $21,058; 2015, $19,718; 2016, $17,892; 2017, $14,581; 2018, $10,228. Debt Issuance Costs Direct and incremental costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense over the terms of the related credit agreements. Debt discounts incurred in connection with the issuance of long-term debt are deferred and recorded as a reduction of outstanding debt and amortized to interest expense using the effective interest method over the terms of the related credit agreements. Approximately $4,772, $3,759, and $1,986 of deferred financing costs and original issue discounts were amortized to interest expense during fiscal years 2013, 2012 and 2011, respectively. Estimated amortization expense each year for the five years subsequent to December 31, 2013 is as follows: 2014, $4,919; 2015, $5,033; 2016, $5,165; 2017, $5,273; 2018, $5,143. Long-Lived Assets The Company periodically evaluates the carrying value of long-lived assets (excluding goodwill and trade names). Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of an asset, a loss is recognized for the difference between the fair value and carrying value of the asset. Such analyses necessarily involve significant judgments. Goodwill and Other Indefinite-Lived Intangible Assets Goodwill represents the excess of the purchase price over fair value of identifiable net assets acquired from business acquisitions. Goodwill is not amortized, but is reviewed for impairment on an annual basis and between annual tests if indicators of impairment are present. The Company evaluates goodwill for impairment annually on October 1 or more frequently when an event occurs or circumstances change that indicates the carrying value may not be recoverable. The Company has the option to assess goodwill for impairment by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then further goodwill impairment testing is not required to be performed. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company is required to perform a two-step goodwill impairment test. In the first step, the fair value of the reporting unit is compared to its book value including goodwill. If the fair value of the reporting unit is in excess of its book value, the related goodwill is not impaired and no further analysis is necessary. If the fair value of the reporting unit is less than its book value, there is an indication of potential impairment and a second step is performed. When required, the second step of testing involves calculating the implied fair value of goodwill for the reporting unit. The implied fair value of goodwill is determined in the same manner as goodwill recognized in a business combination, which is the excess of the fair value of the reporting unit determined in step one over the fair value of its net assets and identifiable intangible assets as if the reporting unit had been acquired. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. For reporting units with a negative book value (i.e., excess of liabilities over assets), qualitative factors are evaluated to determine whether it is necessary to perform the second step of the goodwill impairment test. The Company performed the required annual impairment tests for fiscal years 2013, 2012 and 2011 and found no impairment of goodwill. There can be no assurance that future goodwill impairment tests will not result in a charge to earnings. The changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 are as follows:
|  | Year ended December 31, 2013 |  |  | Year ended December 31, 2012 |
|  | Gross |  |  | Accumulated Impairment |  |  | Net Goodwill |  |  | Gross |  |  | Accumulated Impairment |  |  | Net Goodwill |
Balance at beginning of year |  | $ | 1,056,136 |  |  | $ | (503,193 | ) |  | $ | 552,943 |  |  | $ | 1,050,666 |  |  | $ | (503,193 | ) |  | $ | 547,473 |
Acquisition of business, net |  |  | 56,605 |  |  |  | — |  |  |  | 56,605 |  |  |  | 5,470 |  |  |  | — |  |  |  | 5,470 |
Sale of business, net |  |  | (1,261 | ) |  |  | — |  |  |  | (1,261 | ) |  |  | — |  |  |  | — |  |  |  | — |
Balance at end of year |  | $ | 1,111,480 |  |  | $ | (503,193 | ) |  | $ | 608,287 |  |  | $ | 1,056,136 |  |  | $ | (503,193 | ) |  | $ | 552,943 |
The Company acquired two businesses during fiscal 2013 for a combined purchase price of $122,391, net of cash acquired, which resulted in additional goodwill of $57,044. Separately, the Ottomotores purchase price allocation was finalized during the second quarter of 2013, which resulted in an adjustment to goodwill of $(439). The Company acquired two businesses during fiscal 2012 for a combined purchase price of $47,044, net of cash acquired, which resulted in additional goodwill of $5,545. Separately, the Magnum purchase price allocation was finalized during the third quarter of 2012, which resulted in an adjustment to goodwill of $(75). Other indefinite-lived intangible assets consist of trade names. The Company tests the carrying value of these trade names by comparing the assets fair value to its carrying value. Fair value was measured using a relief-from-royalty approach, which assumes the fair value of the trade name is the discounted cash flows of the amount that would be paid had the Company not owned the trade name and instead licensed the trade name from another company. The Company conducts its annual impairment tests for indefinite-lived intangible assets on October 31st of each year. The Company performed the required annual impairment tests for fiscal years 2013 and 2012 and found no impairment of indefinite-lived trade names. During the fourth quarter of 2011, the Company decided to strategically transition certain products to their more widely known Generac brand. Based on this decision, the Company recorded a $9,389 non-cash trade name impairment charge as of October 31, 2011 which primarily related to the write down of the impacted trade name to net realizable value. There can be no assurance that future impairment tests will not result in a charge to earnings. Income Taxes The Company is a C Corporation and, therefore, accounts for income taxes pursuant to the liability method. Accordingly, the current or deferred tax consequences of a transaction are measured by applying the provision of enacted tax laws to determine the amount of taxes payable currently or in future years. Deferred income taxes are provided for temporary differences between the income tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the years in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies, as appropriate, in making this assessment. Revenue Recognition Sales, net of estimated returns and allowances, are recognized upon shipment of product to the customer, which is generally when title passes, the Company has no further obligations, and the customer is required to pay. The Company, at the request of certain customers, will warehouse inventory billed to the customer but not delivered. Unless all revenue recognition criteria have been met, the Company does not recognize revenue on these transactions until the customers take possession of the product. The funds collected on product warehoused for these customers are recorded as a customer advance until the customer takes possession of the product and the Company’s obligation to deliver the goods is completed. Customer advances are included in accrued liabilities in the accompanying consolidated balance sheets. The Company provides for certain estimated sales promotion, discounts and incentive expenses which are recognized as a reduction of sales. Historically, product returns, whether in the normal course of business or resulting from repurchases made under a floor plan financing program, have not been material. Shipping and Handling Costs Shipping and handling costs billed to customers are included in net sales, and the related costs are included in cost of goods sold in the consolidated statements of comprehensive income. Advertising and Co-Op Advertising Expenditures for advertising, included in selling and service expenses in the accompanying consolidated statements of comprehensive income, are expensed as incurred. Total expenditures for advertising were $19,910, $13,360, and $11,742 for the years ended December 31, 2013, 2012, and 2011, respectively. Research and Development The Company expenses research and development costs as incurred. Total expenditures incurred for research and development were $29,271, $23,499, and $16,476 for the years ended December 31, 2013, 2012 and 2011, respectively. Foreign Currency Translation and Transactions Foreign currency balance sheet accounts are translated into dollars at the rates of exchange in effect at fiscal year-end. Income and expenses incurred in a foreign currency are translated at the average rates of exchange in effect during the year. The related translation adjustments are made directly to a separate component of Stockholders’ Equity. Gains and losses from foreign currency transactions are included in net income in the Company’s consolidated statements of comprehensive income. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss includes foreign currency translation adjustments, pension liability adjustments and unrealized gains (losses) on certain cash flow hedges. The components of accumulated other comprehensive loss, net of tax, at December 31, 2013 and 2012 were:
|  | December 31, |
|  | 2013 |  |  | 2012 |
Foreign currency translation adjustments |  | $ | 1,204 |  |  | $ | (34 | )
Pension liability, net of tax of $886 and $(4,174) |  |  | (4,393 | ) |  |  | (12,081 | )
Unrealized gain (loss) on cash flow hedges, net of tax of $462 and $(109) |  |  | 774 |  |  |  | (2,381 | )
Accumulated other comprehensive loss |  | $ | (2,415 | ) |  | $ | (14,496 | )
The following presents a tabular disclosure about changes in accumulated other comprehensive loss during the year ended December 31, 2013:
|  | Foreign Currency Translation Adjustments |  |  | Defined Benefit Pension Plan |  |  | Unrealized gain (loss) on cash flow hedges |  |  | Total |
Beginning Balance |  | $ | (34 | ) |  | $ | (12,081 | ) |  | $ | (2,381 | ) |  | $ | (14,496 | )
Other comprehensive income before reclassifications |  |  | 1,238 |  |  |  | 6,994 |  |  |  | 774 |  |  |  | 9,006 |
Amounts reclassified from accumulated other comprehensive loss |  |  | - |  |  |  | 694 |  |  |  | 2,381 |  |  |  | 3,075 |
Net current-period other comprehensive income |  |  | 1,238 |  |  |  | 7,688 |  |  |  | 3,155 |  |  |  | 12,081 |
Ending Balance |  | $ | 1,204 |  |  | $ | (4,393 | ) |  | $ | 774 |  |  | $ | (2,415 | )
The following presents a tabular disclosure about reclassification adjustments out of accumulated other comprehensive loss during the years ended December 31, 2013 and 2012:
|  | Amounts reclassified from other accumulated comprehensive loss for the year ended December 31, |  |  |
|  | 2013 |  |  | 2012 |  | Affected line item in the statement where net income is presented |
Amortization of unrealized loss on interest rate swaps |  |  |  |  |  |
Gross |  | $ | (2,490 | ) |  | $ | (2,177 | ) | Interest expense |
Tax benefit |  |  | 109 |  |  |  | 95 |  |  |
Net of tax |  |  | (2,381 | ) |  |  | (2,082 | ) |  |
Amortization of defined benefit pension actuarial losses |  |  |  |  |  |  |
Gross |  |  | (1,108 | ) |  |  | (909 | ) |  |  | (1) |
Tax benefit |  |  | 414 |  |  |  | 356 |  |  |  |  |
Net of tax |  |  | (694 | ) |  |  | (553 | ) |  |  |  |
| (1) | These actuarial losses are included in the computation of net periodic pension cost. See Note 9 – Benefit Plans for additional details.
Fair Value of Financial Instruments The Company believes the carrying amount of its financial instruments (cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term borrowings), excluding long-term borrowings, approximates the fair value of these instruments based upon their short-term nature. The fair value of long-term borrowings, including amounts classified as current, which have an aggregate carrying value of $1,197,000 was approximately $1,199,993 (level 2) at December 31, 2013, as calculated based on independent valuations whose inputs and significant value drivers are observable. Fair Value Measurements ASC 820-10 Fair Value Measurements and Disclosures among other things, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the pronouncement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value are based on the market approach, which are prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Assets and (liabilities) measured at fair value on a recurring basis are as follows:
|  |  |  |  | Fair Value Measurement Using |
|  | Total December 31, 2013 |  |  | Quoted Prices in Active Markets for Identical Contracts (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |
Interest rate swaps |  | $ | 1,236 |  |  | $ | – |  |  | $ | 1,236 |
Commodity contracts |  | $ | 69 |  |  | $ | – |  |  | $ | 69 |
Foreign currency contracts |  | $ | 56 |  |  | $ | – |  |  | $ | 56 |
|  |  |  |  | Fair Value Measurement Using |
|  | Total December 31, 2012 |  |  | Quoted Prices in Active Markets for Identical Contracts (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |
Interest rate swaps |  | $ | (2,973 | ) |  | $ | – |  |  | $ | (2,973 | )
Commodity Contracts |  | $ | 111 |  |  | $ | – |  |  | $ | 111 |
The fair value of derivatives designated as hedging instruments is included in other assets in the consolidated balance sheet as of December 31, 2013. The fair value of derivatives not designated as hedging instruments is included in other assets and other current liabilities in the consolidated balance sheets as of December 31, 2013 and 2012, respectively. The valuation techniques used to measure the fair value of derivative contracts classified as level 2, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. The fair value of derivative contracts above considers the Company’s credit risk in accordance with ASC 820-10. Excluding the impact of credit risk, the fair value of derivatives at December 31, 2013 and 2012 was $1,385 (asset) and $2,936 (liability), respectively, and this represents the amount the Company or other counterparty would need to pay to exit the agreements on this date. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Derivative Instruments and Hedging Activities The Company records all derivatives in accordance with ASC 815, Derivatives and Hedging, which requires all derivative instruments be reported on the consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The Company is exposed to market risk such as changes in commodity prices, foreign currencies, and interest rates. The Company does not hold or issue derivative financial instruments for trading purposes. Commodities The primary objectives of the commodity risk management activities are to understand and mitigate the impact of potential price fluctuations on the Company’s financial results and its economic well-being. While the Company’s risk management objectives and strategies will be driven from an economic perspective, the Company attempts, where possible and practical, to ensure that the hedging strategies it engages in can be treated as “hedges” from an accounting perspective or otherwise result in accounting treatment where the earnings effect of the hedging instrument provides substantial offset (in the same period) to the earnings effect of the hedged item. Generally, these risk management transactions will involve the use of commodity derivatives to protect against exposure resulting from significant price fluctuations. The Company primarily utilizes commodity contracts with maturities of less than 12 months. These are intended to offset the effect of price fluctuations on actual inventory purchases. Outstanding commodity forward contracts in place to hedge the Company’s projected commodity purchases were as follows.
As of December 31, 2013:
Commodity | Trade Date | Effective Date |  | Notional Amount |  | Termination Date
Copper | 6/21/2013 | 10/1/2013 |  | $ | 2,169 |  | 6/30/2014
As of December 31, 2012: |  |  |  |  |  |
Commodity | Trade Date | Effective Date |  | Notional Amount |  | Termination Date
Copper | 10/29/2012 | 1/1/2013 |  | $ | 3,472 |  | 9/30/2013
As of December 31, 2011: |  |  |  |  |  |
Commodity | Trade Date | Effective Date |  | Notional A mount |  | Termination Date
Copper | 09/19/2011 | 10/1/2011 |  | $ | 4,533 |  | 6/30/2012
Copper | 09/28/2011 | 10/1/2011 |  | $ | 1,935 |  | 6/30/2012
Total losses or gains recognized in the consolidated statements of operations on commodity contracts were a loss of $605, a gain of $386, and a loss of $861 for the years ended December 31, 2013, 2012, and 2011, respectively. Foreign Currencies The Company is exposed to foreign currency exchange risk as a result of transactions in other currencies. The Company periodically utilizes foreign currency forward purchase and sales contracts to manage the volatility associated with foreign currency purchases in the normal course of business. Contracts typically have maturities of one year or less. There were no foreign currency hedge contracts outstanding as of December 31, 2012 or 2011. As of December 31, 2013, we had the following foreign currency contracts outstanding (in thousands):
Currency Denomination |  | Notional Amount |
United States Dollar (USD) |  |  | 650 |
British Pound Sterling (GBP) |  |  | 4,000 |
Interest Rates The Company has two interest rate swap agreements outstanding as of December 31, 2013 with an aggregate notional amount of $200,000. The Company had two interest rate swap agreements outstanding as of December 31, 2012 with an aggregate notional amount of $300,000. In 2010, the Company entered into two interest rate swap agreements and had formally documented all relationships between interest rate hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. The first was entered into on January 21, 2010. The effective date of this swap was July 1, 2010 with a notional amount of $200,000, a fixed LIBOR rate of 1.73% and an expiration date of July 1, 2012. The second was entered into on June 29, 2010. The effective date of that swap was October 1, 2010 with a notional amount of $100,000, a fixed LIBOR rate of 1.025% and an expiration date of October 1, 2012. The Company entered into two interest rate swap agreements on April 1, 2011. The effective date of the first swap was July 1, 2012 with a notional amount of $200,000, a fixed LIBOR rate of 1.905% and an expiration date of July 1, 2013. The effective date of the second swap was October 1, 2012 with a notional amount of $100,000, a fixed LIBOR rate of 2.22% and an expiration date of October 1, 2013. Due to the incorporation of a new interest rate floor provision in the Term Loan Credit Agreement, which constituted a change in critical terms, the Company concluded that as of May 30, 2012, the outstanding swaps would no longer be highly effective in achieving offsetting changes in cash flows during the periods the hedges were designated. As a result, the Company was required to de-designate the hedges as of May 30, 2012. Beginning May 31 2012, the effective portion of the swaps prior to the change (i.e. amounts previously recorded in Accumulated Other Comprehensive Loss) were amortized into interest expense over the period of the originally designated hedged transactions which had various termination dates through October 2013. Future changes in fair value of these swaps were immediately recognized in the consolidated statements of comprehensive income as interest expense. In 2013, the Company entered into two interest rate swap agreements and had formally documented all relationships between interest rate hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. These interest rate swap agreements qualify as cash flow hedges. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss). The cash flows of the swaps are recognized as adjustments to interest expense each period. The ineffective portion of the derivatives’ change in fair value, if any, is immediately recognized in earnings. The Company assesses on an ongoing basis whether derivatives used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. The swaps were both entered into on October 23, 2013. The effective dates of the swaps are July 1, 2014 with a notional amount of $100,000 each and a fixed LIBOR rate of 1.737% and 1.742% with expiration dates of July 1, 2018. The following presents the impact of interest rate swaps, commodity contracts and currency contracts on the consolidated statement of comprehensive income for the year ended December 31, 2013, 2012 and 2011:
|  | Amount of gain (loss) recognized in AOCI for the twelve months ended December 31, |  | Location of gain (loss) recognized in net income (loss) on ineffective portion of hedges |  | Amount of loss reclassified from AOCI into net income (loss) for the twelve months ended December 31, |  |  | Amount of gain (loss) recognized in net income (loss) on hedges (ineffective portion) for twelve months ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |  |  |  | 2013 |  |  | 2012 |  |  | 2011 |  |  | 2013 |  |  | 2012 |  |  | 2011 |
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps (1) |  | $ | 774 |  |  | $ | 365 |  |  | $ | (683 | ) | Interest Expense |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity and foreign currency contracts |  | $ | - |  |  | $ | - |  |  | $ | - |  | Cost of goods sold |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | (661 | ) |  | $ | 386 |  |  | $ | (861 | )
Interest rate swaps (2) |  | $ | - |  |  | $ | - |  |  | $ | - |  | Interest Expense |  | $ | (2,381 | ) |  | $ | (2,082 | ) |  | $ | - |  |  | $ | 2,973 |  |  | $ | 1,695 |  |  | $ | - |
(1) | Amounts recorded for the twelve months ended December 31, 2012 and 2011 relate to the interest rate swap agreements outstanding prior to May 30, 2012, the date the hedging relationships for these agreements were terminated.
(2) | Amounts recorded for the twelve months ended December 31, 2013 and 2012 relate to interest rate swap agreements outstanding as of May 30, 2012, the date the hedging relationships for these agreements were terminated.
Stock-Based Compensation Stock-based compensation expense, including stock options and restricted stock awards, is generally recognized on a straight-line basis over the vesting period based on the fair value of awards which are expected to vest. The fair value of all share-based awards is estimated on the date of grant. Segment Reporting The Company operates in and reports as a single operating segment, which is the design and manufacture of a wide range of power products. Net sales are predominantly generated through the sale of generators and other engine powered products through various distribution channels. The Company manages and evaluates its operations as one segment primarily due to similarities in the nature of the products, production processes and methods of distribution. The Company’s sales in the United States represent approximately 88%, 93%, and 95% of total sales for the years ended December 31, 2013, 2012 and 2011, respectively. Approximately 90%, 98% and 100% of the Company’s identifiable long-lived assets are located in the United States as of December 31, 2013, 2012 and 2011, respectively. The Company's product offerings consist primarily of power products with a range of power output geared for varying end customer uses. Residential power products and commercial & industrial power products are each a similar class of products based on similar power output and end customer usage. The breakout of net sales between residential, commercial & industrial, and other products is as follows:
|  | Year ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Residential power products |  | $ | 843,727 |  |  | $ | 705,444 |  |  | $ | 491,016 |
Commercial & industrial power products |  |  | 569,890 |  |  |  | 410,341 |  |  |  | 250,270 |
Other |  |  | 72,148 |  |  |  | 60,521 |  |  |  | 50,690 |
Total |  | $ | 1,485,765 |  |  | $ | 1,176,306 |  |  | $ | 791,976 |
New Accounting Pronouncements In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). This guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other comprehensive income (AOCI). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income. However, the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the notes thereto. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This standard is effective prospectively for annual and interim reporting periods beginning after December 15, 2012. The Company’s adoption of this standard did not have a material impact on the Company’s financial condition or results of operations. In July 2013, the FASB issued ASU No. 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes ("ASU 2013-10"). ASU 2013-10 permits the Fed Funds Effective Swap Rate to be used as a U.S. benchmark interest rate for hedge accounting purposes, in addition to the United States Treasury rate and London Interbank Offered Rate ("LIBOR"). In addition, the restriction on using different benchmark rates for similar hedges is removed. The provisions of ASU 2013-10 are effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The adoption of ASU 2013-10 did not have a material impact on the Company’s financial condition or results of operations. There are several other new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

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