Derivative Instruments

12 Months Ended

Dec. 31, 2013

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments

NOTE 11 – DERIVATIVE INSTRUMENTS:

Certain of the Corporation’s operations are subject to risk from exchange rate fluctuations in connection with sales in foreign currencies. To minimize this risk, foreign currency sales contracts are entered into which are designated as cash flow or fair value hedges. As of December, 2013, approximately $21,714 of anticipated foreign-denominated sales has been hedged which are covered by fair value contracts settling at various dates through January 2015. The fair value of assets held as collateral for the fair value contracts as of December 31, 2013 approximated $828. As of December 31, 2013, there are no cash flow contracts outstanding for future sales.

Additionally, certain of the divisions of the Air and Liquid Processing segment are subject to risk from increases in the price of commodities (copper and aluminum) used in the production of inventory. To minimize this risk, futures contracts are entered into which are designated as cash flow hedges. The change in fair value of the derivative is deferred in accumulated other comprehensive income (loss). Any portion considered to be ineffective, including that arising from the unlikelihood of an anticipated transaction to occur, is reported as a component of earnings (other income/expense) immediately. Upon occurrence of the anticipated transaction, the futures contract is settled and the change in fair value previously deferred in accumulated other comprehensive income (loss) is reclassified to earnings (costs of products sold, excluding depreciation) when the projected sales occur. At December 31, 2013, approximately 57% or $2,970 of anticipated copper purchases over the next nine months and 38% or $463 of anticipated aluminum purchases over the next six months are hedged. The fair value of assets held as collateral as of December 31, 2013 equaled $400.

The Corporation previously entered into foreign currency purchase contracts to manage the volatility associated with euro-denominated progress payments to be made for certain machinery and equipment. As of December 31, 2010, all contracts had been settled and the underlying fixed assets were placed in service. The change in the fair value is included in accumulated other comprehensive income (loss) and is being amortized to pre-tax earnings (as an offset to depreciation expense) over the life of the underlying assets.

No portion of the existing cash flow or fair value hedges is considered to be ineffective, including any ineffectiveness arising from the unlikelihood of an anticipated transaction to occur. Additionally, no amounts have been excluded from assessing the effectiveness of the hedge.

At December 31, 2013, the Corporation has purchase commitments covering 53% or $4,329 of anticipated natural gas usage over the next two years at one of its subsidiaries. The commitments qualify as normal purchases and, accordingly, are not reflected on the consolidated balance sheet.

The Corporation does not enter into derivative transactions for speculative purposes and, therefore, holds no derivative instruments for trading purposes.

The following summarizes location and fair value of the foreign currency sales contracts recorded on the consolidated balance sheets as of December 31:

	Location	2013			2012
Cash flow hedge contracts	Other current assets	$	0		$	46
Fair value hedge contracts	Other current assets		426			218
	Other noncurrent assets		17			0
Fair value hedged item	Accounts receivable		(36	)		(94	)
	Other current liability		488			233
	Other noncurrent liability		40			0

The change in the fair value of the cash flow contracts is recorded as a component of accumulated other comprehensive income (loss). Amounts recognized as and reclassified from accumulated other comprehensive income (loss) are recorded as a component of other comprehensive income (loss) and are summarized below. All amounts are after-tax.

For the Year Ended December 31, 2013	Comprehensive Income (Loss) Beginning of the Year			Recognized as Comprehensive Income (Loss)			Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss) End of the Year
Foreign currency sales contracts—cash flow hedges	$	0		$	0		$	0		$	0
Foreign currency purchase contracts		292			0			17			275
Future contracts – copper and aluminum		26			(251	)		(263	)		38
	$	318		$	(251	)	$	(246	)	$	313
For the Year Ended December 31, 2012
Foreign currency sales contracts—cash flow hedges	$	114		$	10		$	124		$	0
Foreign currency purchase contracts		309			0			17			292
Future contracts – copper and aluminum		(314	)		92			(248	)		26
	$	109		$	102		$	(107	)	$	318
For the Year Ended December 31, 2011
Foreign currency sales contracts—cash flow hedges	$	281		$	(24	)	$	143		$	114
Foreign currency purchase contracts		329			0			20			309
Future contracts – copper and aluminum		589			(683	)		220			(314	)
	$	1,199		$	(707	)	$	383		$	109

The change in fair value reclassified or expected to be reclassified from accumulated other comprehensive income (loss) to earnings is summarized below. All amounts are pre-tax.

	Location of Gain (Loss) in Statements	Estimated to be Reclassified in the Next		Year Ended December 31,
	of Operations	12 Months		2013			2012			2011
Foreign currency sales contracts—cash flow hedges	Net sales	$	0	$	0		$	197		$	228
Foreign currency purchase contracts	Depreciation		27		27			27			32
Futures contracts – copper and aluminum	Costs of products sold (excluding depreciation)		59		(419	)		(398	)		353

(Losses) gains on foreign exchange transactions included in other income (expense) approximated $(227), $107 and $(371) for 2013, 2012 and 2011, respectively.