Derivative Instruments And Hedging Strategies

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments And Hedging Strategies

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 condensed consolidated balance sheets. The fair values of the Company’s derivative instruments as of September 30, 2014 were as follows (in thousands):

	Derivative Asset		Derivative Liability
Forward currency exchange, option and future contracts	$	—	$	60
Interest rate swap agreements	—		744
Commodity swap, option and future contracts:
Exchange traded	1,418		3,268
Non-exchange traded	5,959		60
	$	7,377	$	4,132

Cash Flow Hedges. As of September 30, 2014, the Company had no interest rate swap agreements designated as cash flow hedges. As of September 30, 2014, SCFCo, one of the Company’s Inland River Services 50% or less owned companies, had two interest rate swap agreements with maturities in 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 1.62% on the aggregate amortized notional value of $16.9 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value. As of September 30, 2014, SeaJon, 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. The instrument calls for this company to pay a fixed interest rate of 2.79% on the amortized notional value of $35.6 million and receive a variable interest rate based on LIBOR on the amortized notional value. Subsequent to September 30, 2014, Sea-Cat Crewzer and Sea-Cat Crewzer II, two of the Company's Offshore Marine Services 50% or less owned companies, entered into interest rate swap agreements designated as cash flow hedges that mature in 2019. The first instrument calls for Sea-Cat Crewzer to pay a fixed rate of interest of 1.52% on the amortized notional value of $24.8 million and receive a variable interest rate based on LIBOR on the amortized notional value. The second instrument calls for Sea-Cat Crewzer II to pay a fixed rate of interest of 1.52% on the amortized notional value of $28.0 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.

Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments for the nine months ended September 30 as follows (in thousands):

	2014			2013
Options on equities and equity indices	$	22		$	(4,132	)
Forward currency exchange, option and future contracts	62			(439		)
Interest rate swap agreements	(169		)	253
Commodity swap, option and future contracts:
Exchange traded	(2,996		)	368
Non-exchange traded	400			715
	$	(2,681	)	$	(3,235	)

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 the market value of marketable security positions that the Company is either about to acquire, has acquired or is about to dispose of.

The Company enters and settles forward currency exchange, option and future contracts with respect to various foreign currencies. As of September 30, 2014, the outstanding forward currency exchange contracts translated into a net purchase of foreign currencies with an aggregate U.S. dollar equivalent of $3.5 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 and certain of its 50% or less owned companies have entered into interest rate swap agreements for the general purpose of providing protection against increases in interest rates, which might lead to higher interest costs. As of September 30, 2014, the interest rate swaps held by the Company or its 50% or less owned companies were as follows:

• The Company has various interest rate swap agreements with maturities ranging from 2014 through 2018 that call for the Company to pay fixed interest rates ranging from 3.00% to 3.05% on an aggregate amortized notional value of $32.3 million and receive a variable interest rate based on LIBOR or Euribor on these aggregate amortized notional values.

• Dynamic Offshore, an Offshore Marine Services 50% or less owned company, has 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 $95.8 million and receive a variable interest rate based on LIBOR on the amortized notional value.

• OSV Partners, an Offshore Marine Services 50% or less owned company, has two interest rate swap agreements maturing in 2020 that call for this company to pay fixed interest rates ranging from 1.89% to 2.27% on the aggregate amortized notional value of $32.6 million and receive a variable interest rate based on LIBOR on the amortized notional value.

• Sea-Cat Crewzer, an Offshore Marine Services 50% or less owned company, has an interest rate swap agreement maturing in 2015 that was dedesignated as a cash flow hedge in July 2014. This instrument calls for this company to pay a fixed interest rate of 1.48% on the amortized notional value of $15.7 million and receive a variable interest rate based on LIBOR on the amortized notional value.

• Dorian, a Shipping Services 50% or less owned company, has 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 $122.6 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value.

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 balance from market changes. In the Company’s agricultural commodity trading and logistics 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 September 30, 2014, 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 September 30, 2014, none of these types of positions were outstanding.