Derivative Instruments And Hedging Strategies

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments And Hedging Strategies

3. DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

Derivative instruments are classified as either assets or liabilities based on their individual fair values. Derivative assets and liabilities are included in other receivables and other current liabilities, respectively, in the accompanying consolidated balance sheets. The fair values of the Company’s derivative instruments as of December 31 were as follows (in thousands):

	2013				2012
	Derivative Asset		Derivative Liability		Derivative Asset		Derivative Liability
Derivatives not designated as hedging instruments:
Options on equities and equity indices	$	224	$	7	$	351	$	1
Forward currency exchange, option and future contracts	349		213		11		160
Interest rate swap agreements	—		1,615		—		5,884
Commodity swap, option and future contracts:
Exchange traded	185		1,504		2,826		736
Non-exchange traded	5,499		—		4,348		199
	$	6,257	$	3,339	$	7,536	$	6,980

Cash Flow Hedges. As of December 31, 2013 and December 31, 2012, there were no interest rate swap agreements designated as cash flow hedges. As of December 31, 2013, one of the Company’s Offshore Marine Services 50% or less owned companies had an interest rate swap agreement maturing in 2015 that has been designated as a cash flow hedge. This instrument calls for this company to pay a fixed interest rate of 1.48% on the amortized notional value of $16.8 million and receive a variable interest rate based on LIBOR on the amortized notional value. As of December 31, 2013, one of the Company’s Inland River Services 50% or less owned companies had three interest rate swap agreements with maturities ranging from 2014 to 2015 that have been designated as cash flow hedges. These instruments call for this company to pay fixed rates of interest ranging from 1.53% to 4.16% on the aggregate amortized notional value of $28.6 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value. Additionally, as of December 31, 2013, one of the Company's Shipping Services 50% or less owned companies had an interest rate swap agreement maturing in 2017 that has been designated as a cash flow hedge. This instrument calls for this company to pay a fixed interest rate of 2.79% on the amortized notional value of $37.3 million and receive a variable interest rate based on LIBOR on the amortized notional value. By entering into these interest rate swap agreements, the Company's 50% or less owned companies have converted the variable LIBOR component of certain of their outstanding borrowings to a fixed interest rate.

The Company recognized gains (losses) on derivative instruments designated as cash flow hedges for the years December 31 as follows (in thousands):

	Other comprehensive income (loss)
	2013		2012			2011
Interest rate swap agreements, effective portion	$	109	$	(1,710	)	$	(4,532	)
Reclassification of derivative losses to interest expense or equity in earnings (losses) of 50% or less owned companies	622		2,724			3,632
Reclassification of net derivative losses on cash flow hedges to derivative losses, net upon dedesignation	—		3,272			—
	$	731	$	4,286		$	(900	)

	Derivative gains (losses), net
	2013		2012			2011
Interest rate swap agreements, ineffective portion	$	—	$	(58	)	$	(46	)

Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments for the years ended December 31 as follows (in thousands):

	Derivative gains (losses), net
	2013			2012			2011
Options on equities and equity indices	$	(5,270	)	$	(680	)	$	1,693
Forward currency exchange, option and future contracts	(451		)	837			(621		)
Interest rate swap agreements	(37		)	(3,778		)	(1,103		)
Commodity swap, option and future contracts:
Exchange traded	(3,915		)	(1,020		)	(2,008		)
Non-exchange traded	1,350			1,887			331
U.S. treasury notes, rate locks and bond future and option contracts	—			—			(28,301		)
	$	(8,323	)	$	(2,754	)	$	(30,009	)

The Company holds positions in publicly traded equity options that convey the right or obligation to engage in a future transaction on the underlying equity security or index. The Company’s investment in equity options primarily includes positions in energy, marine, transportation and other related businesses. These contracts are typically entered into to mitigate the risk of changes in market value of marketable security positions that the Company is either about to acquire, has acquired or is about to dispose.

The Company enters and settles forward currency exchange, option and future contracts with respect to various foreign currencies. As of December 31, 2013, the outstanding forward currency exchange contracts translated into a net purchase of foreign currencies with an aggregate U.S. dollar equivalent of $25.9 million. These contracts enable the Company to buy currencies in the future at fixed exchange rates, which could offset possible consequences of changes in currency exchange rates with respect to the Company’s business conducted outside of the United States. The Company generally does not enter into contracts with forward settlement dates beyond twelve to eighteen months.

The Company has entered into various interest rate swap agreements with maturities ranging from 2014 through 2018 that call for the Company to pay fixed interest rates ranging from 2.25% to 3.05% on aggregate amortized notional values of $88.2 million and receive a variable interest rate based on LIBOR or Euribor on these notional values. As of December 31, 2013, one of the Company’s Offshore Marine Services 50% or less owned companies had an interest rate swap agreement maturing in 2018 that calls for this company to pay a fixed interest rate of 1.30% on the amortized notional value of $103.1 million and receive a variable interest rate based on LIBOR on the amortized notional value. As of December 31, 2013, one of the Company’s Shipping Services 50% or less owned companies had entered into six interest rate swap agreements with maturities ranging from 2018 to 2020 that call for this company to pay fixed rates of interest ranging from 2.96% to 5.40% on the aggregate amortized notional value of $130.7 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value. The general purpose of these interest rate swap agreements is to provide protection against increases in interest rates, which might lead to higher interest costs for the Company and its 50% or less owned companies.

The Company enters and settles positions in various exchange and non-exchange traded commodity swap, option and future contracts. ICP enters into exchange traded positions (primarily corn) to protect its raw material and finished goods inventory balances from market changes. In the Company’s agricultural business, fixed price future purchase and sale contracts for sugar are included in the Company’s non-exchange traded derivative positions. The Company enters into exchange traded positions to protect these purchase and sale contracts as well as its inventory balances from market changes. As of December 31, 2013, the net market exposure to corn and sugar under these contracts was not material. The Company also enters into exchange traded positions (primarily natural gas, heating oil, crude oil, gasoline, corn and sugar) to provide value to the Company should there be a sustained decline in the price of commodities that could lead to a reduction in the market values and cash flows of the Company’s Offshore Marine Services, Inland River Services and Shipping Services businesses. As of December 31, 2013, none of these types of positions were outstanding.

The Company enters and settles various positions in U.S. Treasury notes and bonds through rate locks, futures or options on futures tied to U.S. Treasury notes. The general purpose of these transactions is to provide value to the Company should the price of U.S. Treasury notes and bonds decline, leading to generally higher interest rates, which might lead to higher interest costs for the Company. As of December 31, 2013, none of these types of positions were outstanding.