. Derivative Instruments and Hedging Activities

The Company records all derivatives in accordance with

Accounting Standards Codification (ASC)

815,

Derivatives and Hedging

, which requires derivative instruments be reported on the condensed 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 Company

is exposed to significant price fluctuations in commodities it uses as raw materials, and periodically utilizes commodity derivatives to mitigate the impact of these potential price fluctuations on its financial results and its economic well-being. These derivatives typically have maturities of less than

eighteen

months. At

June 30, 2017,

December 31, 2016

and

June 30, 2016,

the Company had

one

commodity contract outstanding, covering the purchases of copper.

Because these contracts do

not

qualify for hedge

accounting, the related gains and losses are recorded in cost of goods sold in the Company’s condensed consolidated statements of comprehensive income. Net pre-tax gains recognized for the

three

and

six

months ended

June 30, 2017

were

and

$185,

respectively. Net pre-tax gains recognized for the

three

and

six

months ended

June 30, 2016

were

$82

and

$76,

respectively.

Foreign Currencies

The Company is exposed to foreign currency exchange risk as a result of transactions denominated in currencies

other than the U.S. Dollar. The Company periodically utilizes foreign currency forward purchase and sales contracts to manage the volatility associated with certain foreign currency purchases and sales in the normal course of business. Contracts typically have maturities of

twelve

months or less. As of

June 30, 2017,

December 31, 2016

and

June 30, 2016,

the Company had eighteen,

thirty-eight

and

twelve

foreign currency contracts outstanding, respectively.

Because these contracts do

not

qualify for

hedge accounting, the related gains and losses are recorded in cost of goods sold in the Company’s condensed consolidated statements of comprehensive income. Net pre-tax gains recognized for the

three

and

six

months ended

June 30, 2017

were

$380

and

$179,

respectively. Net pre-tax gains (losses) recognized for the

three

and

six

months ended

June 30, 2016

were

and $(

178

), respectively.

Interest Rate Swaps

October 2013,

the Company entered into

two

interest rate swap agreements, and in

May 2014,

the Company entered into an additional interest rate swap agreement. The Company formally documented all relationships between interest rate hedging instruments and the related 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, and accordingly, the effective portions of the gains or losses are reported as a component of accumulated other comprehensive loss (AOCL). The cash flows of the swaps are recognized as adjustments to interest expense each period. The ineffective portions of the derivatives’ changes in fair value, if any, are immediately recognized in earnings.

For additional details on these interest rate swaps, refer to Item

of the Annual Report on Form

-K for the year ended

December 31, 2016.

June 2017,

the Company entered into

ten

additional interest rate swap agreements. These interest rate swap agreements also qualify as cash flow hedges. The following table presents the details of the additional interest rate swaps:

Hedged Item

Contract Date

Effective Date

Notional Amount

Fixed LIBOR Rate

Expiration Date

Interest Rate

June 19, 2017

July 2, 2018

125,000

1.6543%

July 1, 2019

Interest Rate

June 19, 2017

July 1, 2019

125,000

1.9053%

July 1, 2020

Interest Rate

June 19, 2017

July 1, 2020

125,000

2.1328%

July 1, 2021

Interest Rate

June 19, 2017

July 1, 2021

125,000

2.3453%

July 1, 2022

Interest Rate

June 19, 2017

July 1, 2022

125,000

2.4828%

May 31, 2023

Interest Rate

June 30, 2017

July 2, 2018

125,000

1.7090%

July 1, 2019

Interest Rate

June 30, 2017

July 1, 2019

125,000

1.9750%

July 1, 2020

Interest Rate

June 30, 2017

July 1, 2020

125,000

2.2170%

July 1, 2021

Interest Rate

June 30, 2017

July 1, 2021

125,000

2.4360%

July 1, 2022

Interest Rate

June 30, 2017

July 1, 2022

125,000

2.5910%

May 31, 2023

Fair Value

The following table presents the fair value of

all of the Company’s derivatives:

	June 30 , 201 7			December 31, 201 6
Commodity contracts	$	432		$	623
Foreign currency contracts		267			(150	)
Interest rate swaps		(493	)		(1,739	)

The fair

value of the commodity and foreign currency contracts are included in other assets, and the fair value of the interest rate swaps are included in other long-term liabilities in the condensed consolidated balance sheets as of

June 30, 2017.

The fair value of the commodity contract is included in other assets, the fair value of the foreign currency contracts are included in other accrued liabilities, and the fair value of the interest rate swaps are included in other long-term liabilities in the condensed consolidated balance sheets as of

December 31, 2016.

Excluding the impact of credit risk, the fair value of the derivative contracts as of

June 30, 2017

and

December 31, 2016

is an asset of

$206

and a liability of

$1,295,

respectively, which represents the amount the Company would either receive or need to pay upon exit of the agreements on those dates.

The

amount of gains recognized in AOCL in the condensed consolidated balance sheets on the effective portion of interest rate swaps designated as hedging instruments for the

three

and

six

months ended

June 30, 2017

were

$324

and

$764,

respectively. The amount of losses for the

three

and

six

months ended

June 30, 2016

were

$134

and

$1,288,

respectively.

he amount of pre-tax gains recognized in cost of goods sold in the condensed consolidated statements of comprehensive income for commodity and foreign currency contracts

not

designated as hedging instruments for the

three

and

six

months ended

June 30, 2017

were

$382

and

$364,

respectively. The amount of pre-tax gains (losses) for the

three

and

six

months ended

June 30, 2016

were

$83

and $(

102

), respectively.