Hedging Transactions and Derivative Financial Instruments

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Hedging Transactions and Derivative Financial Instruments

HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS

The guidance for the accounting and disclosure of derivatives and hedging transactions requires companies to recognize all of their derivative instruments as either assets or liabilities at fair value in the consolidated statements of financial position. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies for hedge accounting treatment as defined under the applicable accounting guidance. For derivative instruments that are designated and qualify for hedge accounting treatment (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss). This gain or loss is reclassified into earnings in the same line item of the consolidated statements of operations associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in thepresent value of the future cash flows of the hedged item (i.e., the ineffective portion) if any, is recognized in the earnings during the current period. There was no material ineffectiveness for the year ended December 31, 2015, 2014 or 2013.

As of December 31, 2015, we have twenty-four outstanding contracts to hedge our exposure related to the purchase of copper by our Power Electronics Solutions and Advanced Connectivity Solutions operating segments. These contracts are held with financial institutions and minimize our risk associated with a potential rise in copper prices. These contracts cover the 2016 and 2017 monthly copper exposure and do not qualify for hedge accounting treatment; therefore, any mark-to-market adjustments required on these contracts are recorded in the "Other income, net" line item in our consolidated statements of operations. 

In 2015, we entered into Euro, Japanese Yen, U.S Dollar, South Korean Won, Great Britain Pound and Chinese Yuan currency forward contracts. We entered into these foreign currency forward contracts to mitigate certain global balance sheet exposures. Mark-to-market adjustments required on the contracts that do not qualify for hedge accounting treatment are recorded in the "Other income, net" line item in our consolidated statements of operations.

We have an interest rate swap to hedge the variable interest rate on our term loan debt. As of December 31, 2015, the remaining notional amount of the interest rate swap covers $16.2 million of our term loan debt. This transaction has been designated as a cash flow hedge and qualifies for hedge accounting treatment.

Notional Value of Copper Derivatives
January 2016- March 2016	150 metric tons per month
April 2016 - June 2016	130 metric tons per month
July 2016 - September 2016	127 metric tons per month
October 2016 - December 2016	117 metric tons per month
January 2017 - March 2017	16 metric tons per month

Notional Values of Foreign Currency Derivatives
YEN/USD	¥	155,000,000
USD/KRW	₩	7,580,028,000
CNY/EUR	¥	14,000,000
EUR/GBP	€	408,291
CNY/USD	¥	45,000,000
USD/EUR	$	400,000
YEN/EUR	¥	160,000,000
EUR/CNH	€	363,029

(Dollars in thousands)	The Effect of Current Derivative Instruments on the Financial Statements for the year ended December 31, 2015				Fair Values of Derivative Instruments as of December 31, 2015
Foreign Exchange Contracts	Location of gain (loss)	Amount of gain (loss)			Other Assets (Liabilities)
Contracts not designated as hedging instruments	Other income (expense), net	$	(78	)	$	(78	)
Copper Derivative Instruments
Contracts not designated as hedging instruments	Other income (expense), net	(666		)	193
Interest Rate Swap Instrument
Contracts designated as hedging instruments	Other comprehensive income (loss)	126			(18		)

(Dollars in thousands)	The Effect of Current Derivative Instruments on the Financial Statements for the year ended December 31, 2014				Fair Values of Derivative Instruments as of December 31, 2014
Foreign Exchange Contracts	Location of gain (loss)	Amount of gain (loss)			Other Assets (Liabilities)
Contracts not designated as hedging instruments	Other income (expense), net	$	(18	)	$	(18	)
Copper Derivative Instruments
Contracts not designated as hedging instruments	Other income (expense), net	(605		)	355
Interest Rate Swap Instrument
Contracts designated as hedging instruments	Other comprehensive income (loss)	152			(144		)