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Hedging Activities And Financial Instruments
 12 Months Ended
Dec. 31, 2013
Hedging Activities And Financial Instruments [Abstract]  
Hedging Activities And Financial Instruments

Note 10 Hedging Activities and Financial Instruments

 

Generally accepted accounting principles require the Company to disclose its estimate of the fair value of material financial instruments, including those recorded as assets or liabilities in its consolidated financial statements. The carrying amounts of current assets and liabilities approximate fair value due to their short-term maturities. Generally, the fair value of a fixed-rate instrument will increase as interest rates fall and decrease as interest rates rise.

 

The carrying amounts and fair values of the Company’s other financial instruments at December 31, 2013 and 2012 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

2012

(in thousands)

 

Carrying Amount

 

Fair Value

 

Carrying Amount

 

Fair Value

Grand Junction note receivable

 

$

 —

 

$

 —

 

$
1,891 

 

$
1,711 

5.50% convertible notes

 

$
11,416 

 

$
12,035 

 

$
80,531 

 

$
86,981 

 

In December 2008, the Company sold its Grand Junction, Colorado facility for $5,500, consisting of $3,500 of cash proceeds (before deducting closing costs) and a zero interest five-year promissory note from the buyer. The Company discounted the note receivable by $1,017, reducing the net gain on the sale to $636. The note receivable was settled during 2013 and the deferred gain of $636 was recognized in interest and other expense, net.

 

The note was secured by (i) a guarantee from the principals of the entity that purchased the facility and (ii) a second deed of trust on the facility.

 

The fair value of the Grand Junction note receivable was calculated at December 31, 2012 by discounting the remaining payments using a discount rate of 13.63%. This rate was derived by taking the risk-free interest rate for similar maturities and adding an estimated risk premium intended to reflect the credit risk.

 

In November 2011, the Company entered into an indenture under which it privately placed $152,000 of 5.50% senior convertible notes due December 15, 2016 with institutional and accredited investors. The estimated fair value of the fixed-rate convertible notes in the table above differs from the amounts reflected on the balance sheet based on the difference between the mandatory redemption value and the market value of the notes. The interest rate used to discount the contractual payments associated with the debentures was 6.91% for 2013 and 6.67% for 2012.

 

The foregoing estimates are subjective and involve uncertainties and matters of significant judgment. Changes in assumptions could significantly affect the Company’s estimates.

 

The Company conducts business in various countries using both the functional currencies of those countries and other currencies to effect cross border transactions. As a result, the Company is subject to the risk that fluctuations in foreign exchange rates between the dates that those transactions are entered into and their respective settlement dates will result in a foreign exchange gain or loss. When practicable, the Company endeavors to match assets and liabilities in the same currency on its balance sheet and those of its subsidiaries in order to reduce these risks. When appropriate, the Company enters into foreign currency contracts to hedge exposures arising from those transactions. The Company has elected not to prepare and maintain the documentation to qualify for hedge accounting treatment under ASC 815, “Derivatives and Hedging,” and therefore, all gains and losses (realized or unrealized) are recognized in “Interest and other expense, net” in the consolidated statements of income and comprehensive income. Depending on their fair value at the end of the reporting period, derivatives are recorded either in prepaid expenses and other current assets or in accrued liabilities on the consolidated balance sheet.

 

There were no foreign currency contracts outstanding at December 31, 2013 or at December 31, 2012.

 

The total impact of foreign currency related items on the consolidated statements of income and comprehensive income was a loss of $773, a gain of $145 and a loss of $118 for the years ended December 31, 2013, 2012 and 2011, respectively.