4.	Derivative Instruments and Hedging Activities

Commodities

The

Company is exposed to price fluctuations in commodities it uses as raw materials; primarily steel, copper and aluminum; 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 both

December 31, 2017

and

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 consolidated statements of comprehensive income. Net pre-tax gains (losses) recognized were

$377,

$739

and $(

1,909

) for the years ended

December 31, 2017,

2016,

and

2015,

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

December 31, 2017

and

2016,

the Company had

twenty-eight

and

thirty-eight

foreign currency contracts outstanding, respectively.

Because these contracts do

not

qualify for hedge accounting,

the related gains and losses are recorded in other, net in the Company’s consolidated statements of comprehensive income. Net pre-tax gains (losses) recognized for the years ended

December 31, 2017,

2016

and

2015

were

$697,

385

) and $(

624

), respectively.

Interest Rate Swaps

October 2013,

the Company entered into

two

interest rate swap agreements; in

May 2014,

the Company entered into

one

interest rate swap agreement; and in

2017,

the Company entered into

twenty

additional interest rate swap agreements. 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 these 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)

in the consolidated balance sheets.

The amount of gains (losses) recognized for the years ended

December 31, 2017,

2016

and

2015

were

$3,712,

$535

and $(

965

), respectively. 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.

Fair Value

The following table presents the fair value of the Company

’s derivatives:

	December 31 , 201 7		December 31, 201 6
Commodity contracts	$	107	$	623
Foreign currency contracts		167		(150	)
Interest rate swaps		4,356		(1,739	)

The fair value of the co

mmodity and foreign currency contracts are included in prepaid expenses and other assets, and the fair value of the interest rate swaps are included in other assets in the consolidated balance sheet as of

December 31, 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 consolidated balance sheet as of

December 31, 2016.

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

December 31, 2017

and

2016

is an asset of

$4,703

and a liability of

$1,295,

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