Derivative Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Foreign Currency Exchange Rate Risk

As of September 30, 2014, the Company was party to forward contracts to hedge changes in foreign currency exchange rates with notional amounts of approximately $11.0 million. The Company uses foreign currency forward contracts to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to certain payments for contract manufacturing in its lower-cost manufacturing facilities. The foreign currency forward contracts hedge currency exposure between the Mexican peso and the U.S. dollar and the Thai baht and the Australian dollar and mature at specified monthly settlement dates through March 2015. At inception, the Company designated the foreign currency forward contracts as cash flow hedges.

Interest Rate Risk

In December 2012, the Company entered into an interest rate swap agreement to fix the LIBOR-based variable portion of the interest rates on its term loan A facility. The term loan A swap agreement fixes the LIBOR-based variable portion of the interest rate, beginning February 2013, on a total of $175.0 million notional amount at 0.74% and expires on October 11, 2017. At inception, the Company designated the swap agreement as a cash flow hedge.

Financial Statement Presentation

As of September 30, 2014 and December 31, 2013, the fair value carrying amount of the Company's derivatives designated as hedging instruments are recorded as follows:

		Asset / (Liability) Derivatives
	Balance Sheet Caption	September 30, 2014			December 31, 2013
		(dollars in thousands)
Derivatives designated as hedging instruments
Interest rate swap	Other assets	$	1,890		$	2,080
Interest rate swap	Accrued liabilities	(260		)	(360		)
Foreign currency forward contracts	Other assets	190			—
Total derivatives designated as hedging instruments		$	1,820		$	1,720

The following tables summarize the income (loss) recognized in accumulated other comprehensive income ("AOCI"), the amounts reclassified from AOCI into earnings and the amounts recognized directly into earnings for the three and nine months ended September 30, 2014 and 2013:

	Amount of Income Recognized in AOCI on Derivative (Effective Portion, net of tax)					Amount of Income (Loss) Reclassified from AOCI into Earnings
						Three months ended September 30,						Nine months ended September 30,
	As of September 30, 2014		As of December 31, 2013		Location of Income (Loss) Reclassified from AOCI into Earnings (Effective Portion)	2014			2013			2014			2013
	(dollars in thousands)					(dollars in thousands)
Derivatives designated as hedging instruments
Interest rate swap	$	1,010	$	1,060	Interest expense	$	(240	)	$	(240	)	$	(730	)	$	(560	)
Foreign currency forward contracts	$	80	$	—	Cost of sales	$	150		$	—		$	370		$	—

Over the next 12 months, the Company expects to reclassify approximately $0.3 million of pre-tax deferred losses from AOCI to interest expense as the related interest payments for the designated interest rate swap are funded and approximately $0.1 million of pre-tax deferred gains from AOCI to cost of sales as the intercompany inventory purchases are settled.

		Amount of Loss Recognized in Earnings on Derivatives
	Location of Loss Recognized in Earnings on Derivatives	Three months ended September 30,					Nine months ended September 30,
		2014		2013			2014		2013
		(dollars in thousands)
Derivatives not designated as hedging instruments
Interest rate swap	Interest expense	$	—	$	(140	)	$	—	$	(410	)

Fair Value Measurements

The fair value of the Company's derivatives are estimated using an income approach based on valuation techniques to convert future amounts to a single, discounted amount. Estimates of the fair value of the Company's interest rate swap and foreign currency forward contracts use observable inputs such as interest rate yield curves and forward currency exchange rates. Fair value measurements and the fair value hierarchy level for the Company's assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013 are shown below.  

	Frequency	Asset / (Liability)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(dollars in thousands)
September 30, 2014
Interest rate swap	Recurring	$	1,630	$	—	$	1,630	$	—
Foreign currency forward contracts	Recurring	$	190	$	—	$	190	$	—
December 31, 2013
Interest rate swap	Recurring	$	1,720	$	—	$	1,720	$	—