Derivatives and Other Financial Instruments

6 Months Ended

Jun. 30, 2014

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments And Hedging Activities

Derivatives and Other Financial Instruments

The Company uses foreign exchange forward contracts to hedge the impact of foreign currency fluctuations on foreign denominated inventory purchases, net assets of our foreign operations, intercompany payables and loans. It does not hold or issue derivative financial instruments for trading purposes. The Company has hedged the net assets of certain of its foreign operations through foreign currency forward contracts. The realized and unrealized gains/losses on these hedges are recorded within AOCI until the investment is sold or disposed of. As of June 30, 2014, there were two outstanding net investment hedges. The cumulative net after-tax gain related to net investment hedges in AOCI as of June 30, 2014 and December 31, 2013 was $2.1 million and $2.3 million.

The Company has designated its foreign currency forward contracts related to certain foreign denominated loans and intercompany payables as fair value hedges.  The gains or losses on the fair value hedges are recognized into earnings and generally offset the transaction gains or losses in the foreign denominated loans that they are intended to hedge.

The Company has designated forward exchange contracts on forecasted intercompany inventory purchases and future purchase commitments as cash flow hedges and as long as the hedge remains effective and the underlying transaction remains probable, the effective portion of the changes in the fair value of these contracts will be recorded in AOCI until earnings are affected by the variability of the cash flows being hedged. Upon settlement of each commitment, the underlying forward contract is closed and the corresponding gain or loss is transferred from AOCI and is included in the measurement of the cost of the acquired asset upon sale.  If a hedging instrument is sold or terminated prior to maturity, gains and losses are deferred in AOCI until the hedged item is settled.  However, if the hedged item is probable of not occurring, the resulting gain or loss on the terminated hedge is recognized into earnings immediately.  The net after-tax unrealized loss included in AOCI at June 30, 2014 for cash flow hedges was immaterial and is expected to be transferred into earnings within the next twelve months upon settlement of the underlying commitment. The net after-tax unrealized loss included in AOCI at December 31, 2013 for cash flow hedges was $0.1 million.

For financial statement presentation, net cash flows from such hedges are classified in the categories of the Consolidated Statement of Cash Flows with the items being hedged. Forward contracts held with each bank are presented within the Consolidated Balance Sheets as a net asset or liability, based on netting agreements with each bank and whether the forward contracts are in a net gain or loss position. The foreign exchange contracts outstanding have maturity dates through March 2015.

The table below details the fair value and location of the Company’s hedges in the Consolidated Balance Sheets: 

(In thousands)	June 30, 2014			December 31, 2013
Derivatives designated as hedging instruments	Accrued Expenses			Accrued Expenses
Foreign exchange forward contracts in an asset position	$	10		$	44
Foreign exchange forward contracts in a liability position	(282		)	(225		)
Net derivatives at fair value	$	(272	)	$	(181	)

For the three and six months endedJune 30, 2014, the Company recorded a loss of $0.1 million and $0.2 million, respectively, compared to a gain of $0.4 million and an insignificant loss in both comparable prior year periods related to foreign exchange forward contracts accounted for as Fair Value hedges to Foreign exchange and other.

Gain and loss activity recorded to cost of goods sold and reclassified from AOCI related to the Company's Cash Flow hedges for the three and six months endedJune 30, are as follows:

Cash Flow Hedging Relationships	Amount of Gain Recognized in AOCI on Derivative (Effective Portion)				Amount of Loss Reclassified from AOCI into Income (Effective Portion)
(In thousands)					Three months ended						Six months ended
	2014		2013		2014			2013			2014			2013
Foreign exchange forward contracts	$	16	$	74	$	(39	)	$	(11	)	$	(118	)	$	(94	)