Derivatives and Other Financial Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Other Financial Instruments

The Company has exposure to certain risks relating to its ongoing business operations, including financial, market, political and economic risks.  The following discussion provides information regarding our exposure to the risks of changing foreign currency exchange rates.  The Company has not entered into these contracts for trading or speculative purposes in the past, nor do we currently anticipate entering into such contracts for trading or speculative purposes in the future.  The foreign exchange contracts are used to mitigate uncertainty and volatility, and to cover underlying exposures.

Foreign Currency Forward Contracts

We manage the risk of changes in foreign currency exchange rates, primarily at our Asian operation, through the use of foreign currency contracts.  Foreign exchange contracts are used to protect the Company from the risk that the eventual cash flows resulting from transactions in foreign currencies, including sales and purchases transacted in a currency other than the functional currency, will be adversely affected by changes in exchange rates.  We report the fair value of the derivatives on our condensed consolidated balance sheets and changes in the fair value are recognized in earnings in the period of the change.

At September 30, 2014, we marked these contracts to market, recording $21,000 as a current liability on the condensed consolidated balance sheet.  For the three month and nine month periods ended September 30, 2014, we recorded a net loss on these contracts of $21,000 and a net gain $2,000, respectively, as a component of our net income.  For the three and nine month periods ended September 30, 2013, we recorded a net loss on these contracts of $23,000 and a net gain of $1,000, respectively, as a component of our net income.

The following table summarizes the gross fair market value of all derivative instruments, which are not designated as hedging instruments and their location in our condensed consolidated balance sheets at September 30, 2014 and December 31, 2013, in thousands:

Liability Derivatives
Derivative Instrument	Location		September 30, 2014		December 31, 2013
Foreign Currency Exchange Contracts	Accrued Expenses	$	21	$	14

The following table summarizes, in thousands, the impact of the Company’s derivatives on the condensed consolidated income statements for the three and nine month periods ended September 30, 2014 and 2013:

			Amount of Gain Recognized in Operations
Derivative	Location of Gain (loss) on Derivative		Three Months Ended September 30,				Nine Month Ended September 30,
Instrument	Instrument		2014		2013		2014		2013
Foreign Currency  Exchange Contracts	Gain (loss) on foreign   currency exchange   rate	$	(21)	$	(23)	$	2	$	1