Derivative Instruments

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

The Company uses derivative instruments to manage selected commodity price and interest rate exposures. The Company does not use derivative instruments for speculative trading purposes, and typically does not hedge beyond one year. Cash flows from derivative instruments are included in net cash provided by operating activities in the consolidated statements of cash flows.

Commodity Derivative Instruments

As of June 30, 2016, the Company had 465 thousand millions of British Thermal Units ("mmBTUs") in aggregate notional amount outstanding natural gas swap contracts to manage commodity price exposures. All of these contracts mature by October 31, 2016. The Company elected to designate these derivative instruments as cash flow hedges in accordance with FASB Accounting Standards Codification ("ASC") 815-20, Derivatives – Hedging. For derivative contracts designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is recorded to accumulated other comprehensive income, and is reclassified to earnings when the underlying forecasted transaction affects earnings. The ineffective portion of changes in the fair value of the derivative is recorded in cost of goods sold. The net unrealized gain that remained in accumulated other comprehensive loss, as of June 30, 2016, was $0.1 million, which is net of a tax amount of $0.1 million. No ineffectiveness was recorded on these contracts during the three months ended June 30, 2016 and 2015. The Company reassesses the probability of the underlying forecasted transactions occurring on a quarterly basis.

For the three and six months ended June 30, 2016, approximately $0.3 million of gains, net of $0.2 million of tax expense and $0.2 million of gains, net of $0.1 million of tax expense, respectively, were recognized in other comprehensive income for the commodity contracts. For the three and six months ended June 30, 2016, the amount of loss reclassified from accumulated other comprehensive income into income was $0.2 million and $0.4 million, respectively. As of June 30, 2016, there was no amount recorded in other current liabilities and $0.2 million was recorded in other current assets. For the three and six months ended June 30, 2015, approximately $0.4 million of gains, net of $0.2 million of tax expenses and $0.5 million of gains, net of $0.3 million of tax expenses, respectively, were recognized in other comprehensive income for the commodity contracts. For the same periods, the amount of gain reclassified from accumulated other comprehensive income into income was nominal. As of December 31, 2015, $0.3 million was recorded in other current liabilities and $0.2 million was recorded in other current assets.

Interest Rate Derivative Instrument

The Company had an interest rate cap on three month U.S. Dollar LIBOR of 2% for a portion of the principal amount outstanding under the First Lien Credit Agreement that expired March 31, 2016. The hedge was being accounted for as a cash flow hedge. Changes in the time value of the interest rate cap are reflected directly in earnings through “other income / expense” in non-operating income. CBP recorded nominal amounts in the three months ended March 31, 2016 and 2015 and the six months ended June 30, 2015. No new arrangement was entered into following expiration on March 31, 2016.

Counterparty Risk

The Company is exposed to credit losses in the event of nonperformance by the counterparties to the Company’s derivative instruments. As of June 30, 2016, the Company’s derivatives were in a $0.2 million net asset position. All of the Company’s counterparties have investment grade credit ratings; accordingly, the Company anticipates that the counterparties will be able to fully satisfy their obligations under the contracts. The Company’s agreements outline the conditions upon which it or the counterparties are required to post collateral. As of June 30, 2016, the Company had no collateral posted with its counterparties related to the derivatives.