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Derivative Instruments and Hedging Activities | 3 Months Ended
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Mar. 31, 2014
Derivative Instruments and Hedging Activities [Abstract] |
Derivative Instruments and Hedging Activities | 2. 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, it 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. The impact of such contracts is 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 March 31, 2014: |  |  |  |
Commodity | Trade Date | Effective Date | Notional Amount | Termination Date
Copper | 6/21/2013 | 10/1/2013 | $ 2,169 | 6/30/2014
Copper | 1/31/2014 | 2/1/2014 | $ 3,879 | 12/31/2014
Copper | 3/11/2014 | 4/1/2014 | $ 3,014 | 12/31/2014
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 March 31, 2013: |  |  |  |
Commodity | Trade Date | Effective Date | Notional Amount | Termination Date
Copper | 10/29/2012 | 1/1/2013 | $ 3,472 | 9/30/2013
Copper | 2/26/2013 | 3/1/2013 | $ 2,677 | 12/31/2013
Copper | 3/1/2013 | 3/1/2013 | $ 2,636 | 12/31/2013
Because these contracts do not qualify for hedge accounting, gains and losses are recorded in cost of goods sold in the Company’s consolidated statements of comprehensive income. Total losses recognized for the three months ended March 31, 2014 and March 31, 2013 were $(326) and $(292), respectively. Foreign Currencies The Company is exposed to foreign currency exchange risk as a result of transactions denominated 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 12 months or less. There were no foreign currency hedge contracts outstanding as of March, 31, 2013. As of March 31, 2014 and December 31, 2013, the following foreign currency contracts were outstanding:
As of March 31, 2014:
Currency Denomination |  |  | Notional Amount
United States Dollar (USD) |  |  | 450
British Pound Sterling (GBP) |  | 3,000
As of December 31, 2013: |  |  |
Currency Denomination |  |  | Notional Amount
United States Dollar (USD) |  |  | 650
British Pound Sterling (GBP) |  | 4,000
Total gains/losses recognized for the three months ended March 31, 2014 were not material. Interest Rate Swaps As of May 30, 2012, the date of a previous credit agreement refinancing, the Company had four interest rate swap agreements outstanding. These agreements were all entered into during 2010 and 2011. 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 remaining two interest rate swap agreements were entered into 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 then new credit agreement, which constituted a change in critical terms, the Company concluded that as of May 30, 2012, the then 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 four outstanding hedges described above 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. On October 23, 2013, the Company entered into two interest rate swap agreements and 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 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 table presents the fair value of the Company’s derivatives:
|  | March 31, 2014 |  |  | December 31, 2013 |
Commodity contracts |  | $ | (255 | ) |  | $ | 69 |
Foreign currency contracts |  |  | (30 | ) |  |  | 56 |
Interest rate swaps |  |  | 452 |  |  |  | 1,236 |
Net derivatives asset |  | $ | 167 |  |  | $ | 1,361 |
The fair value of the interest rate swaps is included in other assets in the condensed consolidated balance sheets as of March 31, 2014 and December 31, 2013, respectively. The fair value of the commodity contracts is included in other current liabilities and other assets in the condensed consolidated balance sheets as of March 31, 2014 and December 31, 2013, respectively. The fair value of the derivative contracts in a liability position considers the Company’s credit risk. Excluding the impact of credit risk, the fair value of the derivative contracts as of March 31, 2014 and December 31, 2013 is an asset of $176 and $1,385, respectively, which represents the amount the Company would need to pay to exit the agreements on those dates. The following presents the impact of interest rate swaps, commodity contracts and foreign currency contracts on the condensed consolidated statements of comprehensive income for the three months ended March 31, 2014 and 2013:
|  | Amount of (loss) recognized in Accumulated Other Comprehensive Loss for the three months ended March 31, |  | Location of gain (loss) recognized in net income on ineffective portion of hedges |  | Amount of (loss) reclassified from Accumulated Other Comprehensive Loss into net income for the three months ended March 31, |  |  | Amount of gain (loss) recognized in net income on hedges (ineffective portion) for the three months ended March 31, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Derivatives designated as hedging instruments |
Interest rate swaps |  | $ | (500 | ) |  | $ | - |  | Interest expense |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Derivatives not designated as hedging instruments |  |
Interest rate swaps (1) |  | $ | - |  |  | $ | - |  | Interest expense |  | $ | - |  |  | $ | (1,002 | ) |  | $ | - |  |  | $ | 1,206 |
Commodity contracts |  | $ | - |  |  | $ | - |  | Cost of goods sold |  | $ | - |  |  | $ | - |  |  | $ | (368 | ) |  | $ | (292 | )
(1) Amounts recorded for the three months ended March 31, 2013 relate to interest rate swap agreements outstanding as of May 30, 2012, the date the hedging relationships for these agreements were terminated

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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 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708775-113959 Reference 2: 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 3: 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 4: 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 5: 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 6: 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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