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Financial Instruments and Fair Value Measurements | 9 Months Ended
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Sep. 30, 2013
Financial Instruments and Fair Value Measurements [Abstract] |
Financial Instruments and Fair Value Measurements | (3) Financial Instruments and Fair Value Measurements Financial Instruments A financial instrument is cash or a contract that imposes an obligation to deliver, or conveys a right to receive cash or another financial instrument. The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered to be representative of fair value because of the short maturity of these instruments. The estimated fair value of the Company's senior secured notes with a face value of $175,000 (fixed rate debt) at September 30, 2013 and December 31, 2012 was $190,313 and $188,895, respectively, and was determined using market quotes classified as Level 2 input within the fair value hierarchy. Derivative Instruments and Hedging Activities On September 30, 2013, the Company had open foreign currency forward contracts, fixed price commodity contracts and an interest rate swap. These contracts are used solely for hedging and not for speculative purposes. Management believes that its use of these instruments to reduce risk is in the Company's best interest. The counterparties to these financial instruments are financial institutions with investment grade credit ratings. Foreign Currency Exchange Rate Risk The Company conducts business internationally and therefore is exposed to foreign currency exchange rate risk. The Company uses derivative financial instruments as cash flow and fair value hedges to mitigate its exposure to fluctuations in foreign currency exchange rates by reducing the effect of such fluctuations on foreign currency denominated transactions and exposures. The currencies hedged by the Company during 2013 and 2012 include the euro, Swedish krona and Mexican peso. In certain instances, the foreign currency forward contracts do not qualify for hedge accounting or are not designated as hedges, and therefore are marked to market with gains and losses recognized in the Company's condensed consolidated statement of operations as a component of other (income) expense, net. The Company's foreign currency forward contracts offset a portion of the gains and losses on the underlying foreign currency denominated transactions as follows: Mexican peso-denominated Foreign Currency Forward Contracts – Cash Flow Hedge The Company holds Mexican peso-denominated foreign currency forward contracts with underlying notional amounts at September 30, 2013 totaling $57,125 compared to $36,500 at December 31, 2012. These cash flow hedges expire ratably on a monthly basis as follows:
| $12,125 | Period from October 2013 through December 2013
| $45,000 | Period from January 2014 through December 2014
These contracts were executed to hedge forecasted transactions and are accounted for as cash flow hedges. As such, the effective portion of the unrealized gain or loss is deferred and reported in the Company's condensed consolidated balance sheets as a component of accumulated other comprehensive loss. The Company's expectation is that the cash flow hedges will be highly effective in the future. The effectiveness of the transactions has been and will be measured on an ongoing basis using regression analysis and forecasted future Mexican peso purchases. Euro-denominated and Swedish krona-denominated Foreign Currency Forward Contracts As of September 30, 2013, the Company held a foreign currency forward contract with an underlying notional amount of $13,293 to reduce the exposure related to the Company's euro-denominated intercompany loans. This contract expires in December 2013. During 2012, the Company also held a foreign currency forward contract to reduce the exposure related to the Company's Swedish krona-denominated intercompany loan. This contract expired on November 30, 2012. The euro-denominated and Swedish krona-denominated foreign currency forward contracts were not designated as hedging instruments. For the three and nine months ended September 30, 2013 the Company recognized a loss of $489 and $404, respectively, in the condensed consolidated statement of operations as a component of other (income) expense, net related to the euro-denominated contracts. For the three and nine months ended September 30, 2012, the Company recognized a loss of $655 and $97, respectively, related to the euro-denominated and Swedish krona-denominated contracts. Commodity Price Risk - Cash Flow Hedge Because copper is a significant raw material in certain products, the Company entered into fixed price commodity contracts with a financial institution to fix the cost of a portion of the Company's copper purchases to mitigate the risk of future price volatility and, consequently, reducing fluctuations in gross margins. The Company has fixed price commodity contracts at September 30, 2013 with an aggregate notional amount of 1,937 pounds compared to an aggregate notional amount of 2,436 pounds at December 31, 2012. These cash flow hedges expire ratably on a monthly basis as follows:
| 763 pounds | Period from October 2013 through December 2013
| 1,174 pounds | Period from January 2014 through December 2014
All of these contracts represent a portion of the Company's forecasted copper purchases. These contracts were executed to hedge a portion of forecasted transactions and the contracts are accounted for as cash flow hedges. The unrealized gain or loss for the effective portion of these hedges is deferred and reported in the Company's condensed consolidated balance sheets as a component of accumulated other comprehensive loss while the ineffective portion is reported in the condensed consolidated statements of operations. The effectiveness of the transactions is measured on an ongoing basis using regression analysis and forecasted future copper purchases. Based upon the results of the regression analysis, the Company has concluded that these cash flow hedges are highly effective. Interest Rate Risk - Fair Value Hedge The Company has a fixed-to-floating interest rate swap agreement (the "Swap") with a notional amount of $45,000 to hedge its exposure to fair value fluctuations on a portion of its senior secured notes. The Swap was designated as a fair value hedge of the fixed interest rate obligation under the Company's $175,000 9.5% senior secured notes due October 15, 2017. The critical terms of the Swap are aligned with the terms of the senior secured notes, including maturity of October 15, 2017, resulting in no hedge ineffectiveness. The unrealized gain or loss for the effective portion of the hedge is deferred and reported in the Company's condensed consolidated balance sheets as an asset or liability as applicable, with the offset to the carrying value of the senior secured notes. Under the Swap, the Company pays a variable interest rate equal to the six-month London Interbank Offered Rate ("LIBOR") plus 7.2% and it receives a fixed interest rate of 9.5%. The Swap requires semi-annual settlements on April 15 and October 15. The difference between amounts to be received and paid under the Swap is recognized as a component of interest expense, net on the condensed consolidated statements of operations. The Swap reduced interest expense by $222 and $241 for the three months ended September 30, 2013 and 2012, respectively, and by $644 and $634 for the nine months ended September 30, 2013 and 2012, respectively. The notional amounts and fair values of derivative instruments in the condensed consolidated balance sheets are as follows:
|  |  |  |  |  |  |  | Prepaid expenses and other |  |  |  |  |  |  |
|  |  |  |  |  |  |  | current assets / other |  | Accrued expenses and other |
|  | Notional amounts (A) |  | long-term assets |  | current liabilities |
|  | September 30, |  | December 31, |  | September 30, |  | December 31, |  | September 30, |  | December 31, |
|  | 2013 |  | 2012 |  | 2013 |  | 2012 |  | 2013 |  | 2012 |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash Flow Hedge s: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward currency contracts |  | $ | 57,125 |  | $ | 36,500 |  | $ | - |  | $ | 1,800 |  | $ | 122 |  | $ | - |
Fixed price commodity contracts |  |  | 1,937 |  |  | 2,436 |  |  | - |  |  | 340 |  |  | 107 |  |  | - |
Fair Value Hedge: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap contract |  | $ | 45,000 |  | $ | 45,000 |  |  | 1,193 |  |  | 2,212 |  |  | - |  |  | - |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward currency contracts |  | $ | 13,293 |  | $ | 12,643 |  |  | - |  |  | - |  |  | 14 |  |  | 191 |
(A) | Notional amounts represent the gross contract / notional amount of the derivatives outstanding. The fixed price commodity contract notional amounts are in pounds.
Amounts recorded for the cash flow hedges in other comprehensive income and in net income for the three months ended September 30, 2013 and 2012 are as follows:
|  | Gain (loss) recorded in other comprehensive income |  | Gain (loss) reclassified from other comprehensive income into net income |
|  | 2013 |  | 2012 |  | 2013 |  | 2012 |
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |
Forward currency contracts |  | $ | (83) |  | $ | 2,301 |  | $ | 612 |  | $ | (15) |
Fixed price commodity contracts |  |  | 635 |  |  | 889 |  |  | (369) |  |  | (774) |
Total derivatives designated as cash flow hedges |  | $ | 552 |  | $ | 3,190 |  | $ | 243 |  | $ | (789) |
Amounts recorded for the cash flow hedges in other comprehensive income (loss) and in net income for the nine months ended September 30, 2013 and 2012 are as follows:
|  | Gain (loss) recorded in other comprehensive income (loss) |  | Gain (loss) reclassified from other comprehensive income (loss) into net income |
|  | 2013 |  | 2012 |  | 2013 |  | 2012 |
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |
Forward currency contracts |  | $ | 228 |  | $ | 5,352 |  | $ | 2,150 |  | $ | (515) |
Fixed price commodity contracts |  |  | (1,099) |  |  | 1,731 |  |  | (652) |  |  | (1,866) |
Total derivatives designated as cash flow hedges |  | $ | (871) |  | $ | 7,083 |  | $ | 1,498 |  | $ | (2,381) |
Gains and losses reclassified from other comprehensive income (loss) into net income were recognized in cost of goods sold in the Company's condensed consolidated statements of operations. The net deferred losses of $2 29 on the cash flow hedge derivatives will be reclassified from other comprehensive income (loss) to the condensed consolidated statements of operations through December 2014. The Company has measured the ineffectiveness of the forward currency and commodity contracts and any amounts recognized in the condensed consolidated financial statements were immaterial for the three and nine months ended September 30, 2013 and 2012. Fair Value Measurements The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of the inputs used.
|  | September 30, |  | December 31, |
|  | 2013 |  | 2012 |
|  | Fair values estimated using |  |  |  |
|  |  |  |  | Level 1 |  | Level 2 |  | Level 3 |  |  |  |
|  | Fair value |  | inputs (A) |  | inputs (B) |  | inputs (C) |  | Fair value |
Financial assets carried at fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap contract |  | $ | 1,193 |  | $ | - |  | $ | 1,193 |  | $ | - |  | $ | 2,212 |
Forward currency contracts |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 1,800 |
Fixed price commodity contracts |  |  | - |  |  | - |  |  | - |  |  |  |  |  | 340 |
Total financial assets carried at fair value |  | $ | 1,193 |  | $ | - |  | $ | 1,193 |  | $ | - |  | $ | 4,352 |
Financial liabilities carried at fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward currency contracts |  | $ | 136 |  | $ | - |  | $ | 136 |  | $ | - |  | $ | 191 |
Fixed price commodity contracts |  |  | 107 |  |  | - |  |  | 107 |  |  | - |  |  | - |
Total financial liabilities carried at fair value |  | $ | 243 |  | $ | - |  | $ | 243 |  | $ | - |  | $ | 191 |
(A) | Fair values estimated using Level 1 inputs, which consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The Company did not have any fair value estimates using Level 1 inputs at September 30, 2013 or December 31, 2012.
(B) | Fair values estimated using Level 2 inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For forward currency, fixed price commodity and interest rate swap contracts, inputs include foreign currency exchange rates, commodity indexes and the six-month forward LIBOR.
(C) | Fair values estimated using Level 3 inputs consist of significant unobservable inputs. The Company did not have any fair value estimates using Level 3 inputs at September 30, 2013 or December 31, 2012.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
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