Derivative Instruments

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Precious Metal and Commodity Inventories

As of December 31, 2014, the Company had the following outstanding futures contracts with settlement dates ranging from February 2015 to March 2015. There were no forward contracts outstanding at December 31, 2014.

			Notional Value
Commodity	Amount		($ in millions)
Silver	675,000	ounces	$	10.5
Gold	200	ounces	$	0.2
Copper	300,000	pounds	$	0.8
Tin	35	metric tons	$	0.7

Of the total futures contracts outstanding, 610,000 ounces of silver and substantially all of the copper contracts are designated and accounted for as fair value hedges.The remaining outstanding futures contracts for silver, and all of the contracts for gold and tin, are accounted for as economic hedges.

The futures contracts are exchange traded contracts acquired through a third party broker. Accordingly, the Company has determined that there is minimal credit risk of default. The Company estimates the fair value of its derivative contracts through the use of market quotes or with the assistance of brokers when market information is not available. The Company maintains collateral on account with the third-party broker. Such collateral consists of both cash that varies in amount depending on the value of open futures contracts, as well as ounces of precious metal held on account by the broker.

Debt Agreements

H&H Group has entered into two interest rate swap agreements to reduce its exposure to interest rate fluctuations. See Note 11 - "Debt" for further discussion of the terms of these arrangements.

The Company's Subordinated Notes had call premiums as well as Warrants associated with them. The Company treated the fair value of these features together as both a discount on the debt and a derivative liability at inception of the loan agreement. The discount was being amortized over the life of the notes as an adjustment to interest expense, and the derivative was marked to market at each balance sheet date. As discussed in Note 11 - "Debt," on March 26, 2013, the Company discharged its obligations associated with the Subordinated Notes and Warrants, and therefore, all discounts and derivative accounts related to the Subordinated Notes and Warrants are now zero.

Effect of Derivative Instruments in the Consolidated Income Statements - Income/(Expense)

(in thousands)		Year Ended
		December 31,
Derivative	Income Statement Line	2014			2013			2012
Commodity contracts	Cost of goods sold	$	2,655		$	2,620		$	—
	Total derivatives designated as hedging instruments	2,655			2,620			—
Commodity contracts	Cost of goods sold	131			(92		)	—
Commodity contracts	Realized and unrealized gain on derivatives	1,307			1,988			522
Interest rate swap agreements	Interest expense	(156		)	(328		)	—
Derivative features of Subordinated Notes	Realized and unrealized (loss) gain on derivatives	—			(793		)	2,060
	Total derivatives not designated as hedging instruments	1,282			775			2,582
	Total derivatives	$	3,937		$	3,395		$	2,582

Fair Value of Derivative Instruments on the Consolidated Balance Sheets - Asset/(Liability)

(in thousands)		December 31,			December 31,
Derivative	Balance Sheet Location	2014			2013
Commodity contracts	Prepaid and other current assets	$	667		$	1,778
	Total derivatives designated as hedging instruments	667			1,778
Commodity contracts	Prepaid and other current assets/(Accrued liabilities)	97			(158		)
Interest rate swap agreements	Other liabilities	(138		)	(214		)
	Total derivatives not designated as hedging instruments	(41		)	(372		)
	Total derivatives	$	626		$	1,406