Derivative Financial Instruments

3 Months Ended

Mar. 31, 2014

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

Note 15.  Derivative Financial Instruments

The Company is exposed to certain risks related to its ongoing business operations. The primary risk managed by using derivative instruments is foreign currency risk.  From time to time the Company’s foreign subsidiaries enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates.  The fair value of the derivative financial instrument is recorded on the Company’s balance sheet and is adjusted to fair value at each measurement date.  The changes in fair value are recognized in the consolidated statements of income in the current period.  The Company does not engage in speculative transactions nor does it hold or issue financial instruments for trading purposes.  The average U.S. dollar equivalent notional amount of outstanding foreign currency exchange contracts was $9,527,000 during the three-month period ended March 31, 2014. The Company reported $141,000 of derivative liabilities in other accrued liabilities at March 31, 2014.  At December 31, 2013, the Company reported $452,000 of derivative assets in other current assets.  The Company recognized, as a component of cost of sales, a net loss of $530,000 on the change in fair value of derivative financial instruments in the three-month period ended March 31, 2014.  In the three-month period ended March 31, 2013, the Company recognized, as a component of cost of sales, a net gain of $337,000 on the change in fair value of derivative financial instruments.  There were no derivatives that were designated as hedges at March 31, 2014.