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DERIVATIVE FINANCIAL INSTRUMENTS
 12 Months Ended
Dec. 31, 2013
DERIVATIVE FINANCIAL INSTRUMENTS  
DERIVATIVE FINANCIAL INSTRUMENTS

6. DERIVATIVE FINANCIAL INSTRUMENTS

        The Company did not use derivative contracts prior to the acquisition of Globe Motors, Inc. in October, 2013. As part of the acquisition, the Company entered into a new Credit Agreement discussed in Note 5. Debt Obligations. The Credit Agreement requires the Company to enter into derivative contracts for at least 50% of the balance of the Term Loan, as amortized. During October 2013, the Company entered into two Interest Rate Swaps with a combined notional amount of $25,000 that amortize quarterly to a notional amount of $6,673 at maturity.

        The Company's use of Interest Rate Swaps assists in stabilizing interest expense and managing exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

        The effective portion of changes in the fair value of the Interest Rate Swaps is recorded in Accumulated Other Comprehensive Income ("AOCI") and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2013, the swaps were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the twelve months ended December 31, 2013, the Company recorded $0 hedge ineffectiveness in earnings.

        Amounts reported in AOCI related to derivatives is reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During 2014, the Company estimates that an additional $212 will be reclassified as an increase to interest expense.

        The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2013 (in thousands):

Derivative Instrument
  Balance Sheet Location   December 31, 2013
Fair Value		  

Interest Rate Swaps

   Prepaid expenses and other assets   $ 41  
           
​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​
           

        The effect of the Company's derivative financial instruments on the consolidated statement of income and comprehensive income is as follows (in thousands):

For the year ended December 31, 2013   For the year ended December 31, 2013   For the year ended December 31, 2013  
Derivative
Instruments
  Net deferral
in OCI of
derivatives
(effective
portion)		   Statement of
earnings
classification		   Net
reclassification
from AOCI into
income (effective
portion)		   Statement of
earnings
classification		   Amount recognized
in income (ineffective
portion and amount
excluded from
effectiveness testing)		  

Interest Rate Swaps

   $ —   Interest expense   $ (41 ) Other (expense)   $ —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

        As of December 31, 2013, the fair value of derivatives in a net asset position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $44. As of December 31, 2013, the Company has not posted any collateral related to these agreements.