Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Measurements

Recurring Fair Value Measurements

In accordance with accounting principles generally accepted in the U.S., certain assets and liabilities are required to be recorded at fair value on a recurring basis. For the Company, the only assets and liabilities that are adjusted to fair value on a recurring basis are derivative financial instruments.

Derivative Financial Instruments

The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company's financial performance and are referred to as "market risks." The Company, when deemed appropriate, uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risk managed by the Company through the use of derivative instruments is foreign currency exchange rate risk related to intercompany interest payments. The Company does not enter into derivative contracts for trading purposes.

In 2013, the Company entered into forward contracts to buy or sell a quantity of a currency at a predetermined future date, and at a predetermined rate or price to mitigate uncertainty and volatility, and to cover underlying exposures to certain payments in currencies other than the functional currency. The Company has not designated these contracts for hedge accounting treatment and, therefore, the gains and losses on these contracts are recorded in other income (loss), net in the consolidated statement of operations. In fiscal years 2013, 2012, and 2011, the Company recognized a loss of $0.4 million, a loss of $0.3 million, and a gain of $0.6 million, respectively, related to these forward contracts.

As of December 31, 2013 and December 31, 2012, derivatives totaling approximately $(0.2) million and $(0.2) million are carried at fair value in the consolidated balance sheets in the line item accrued expenses. The Company has determined that the fair value of the foreign exchange contracts are level 2 measurements in the fair value hierarchy. To measure the fair value of the foreign exchange contracts, the Company obtained quotations from financial institutions. The total notional value of derivatives related to foreign exchange contracts of this type as of December 31, 2013 and December 31, 2012, totaled approximately $9.4 million and $9.0 million, respectively.

The following table summarizes the effect of the Company's derivative instruments on the consolidated statements of operations for the years ended December 31, 2013, December 31, 2012, and December 30, 2011:



		Amount of Pretax Loss (Income) Recognized in Earnings
		Year Ended
	Location of Loss (Income)	December 31, 2013		December 31, 2012		December 30, 2011
Derivatives not designated as hedging instruments
Foreign exchange contracts	Other loss (income)	$	364	$	289	$	(613	)

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a nonrecurring basis as required by accounting principles generally accepted in the U.S. Generally, adjustments made to record assets at fair value on a nonrecurring basis are the result of impairment charges.

In the first quarter of 2013, the Company recorded losses of approximately $1.6 million in other operating charges related to the reclassification of land and buildings to assets held for sale. These losses, incurred as part of the Company's restructuring activities in the European Engineered Products segment, represent the difference between the carrying value prior to the reclassification and the fair value. The fair value of assets held for sale was determined based on the selling price less costs incurred to sell and was classified as Level 1 in the fair value hierarchy. The assets were sold during the second quarter of 2013 and no additional losses were recorded from the sale of the assets.

In the fourth quarter of 2013, the Company recorded a loss of approximately $1.1 million in other operating charges related to the impairment of an in-process Enterprise Resource Planning (ERP) implementation at the European Engineered Products segment. The Company determined that previously capitalized software costs associated with the implementation should be impaired due to the decision to discontinue implementation of the related ERP. The project was previously included in the construction in progress balance within property, plant, and equipment, net, in the consolidated balance sheet and has been completely impaired as of December 31, 2013.

The Company did not record any impairment charges related to assets measured at fair value on a nonrecurring basis during the year ended December 31, 2012 or December 30, 2011.

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, receivables, accounts payable and accrued expenses, and loans and notes payable approximate their fair values because of the relatively short-term maturities of these instruments.

The fair value of our long-term debt is estimated using Level 2 inputs based on dealer quoted prices for our debt instruments based on recent transactions obtained from various sources. As of December 31, 2013, the carrying amount and fair value of our Notes were $375.0 million and $375.0 million, respectively. As of December 31, 2012, the carrying amount and fair value of our Notes were $375.0 million and $348.8 million, respectively.

The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. The fair value of these financial instruments approximates their carrying value at December 31, 2013 and December 31, 2012. The Company places its cash and cash equivalents with high credit quality institutions. At times, such investments may be in excess of the Federal Deposit Insurance Corporation insurance limit; however, the Company believes that its credit risk exposure is not significant due to the high credit quality of the institutions. The Company routinely assesses the financial strength of its customers, monitors past due balances based on contractual terms, and generally does not require collateral. The Company has a concentration of credit risk with customers in the U.S. home improvement retail, U.S. and European RV, U.S. and European commercial construction and U.S. home improvement contractor industries.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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