Derivative Instruments And Hedging Strategies

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments And Hedging Strategies

DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

Derivative instruments are classified as either assets or liabilities based on their individual fair values. Derivative assets and liabilities are included in other receivables and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. The fair values of the Company’s derivative instruments as of June 30, 2013 were as follows (in thousands):

	Derivative Asset		Derivative Liability
Options on equities and equity indices	$	415	$	—
Forward currency exchange, option and future contracts	298		390
Interest rate swap agreements	—		4,271
Commodity swap, option and future contracts:
Exchange traded	554		703
Non-exchange traded	5,514		109
	$	6,781	$	5,473

Cash Flow Hedges. As of June 30, 2013, the Company had no interest rate swap agreements designated as cash flow hedges. As of June 30, 2013, one of the Company’s Offshore Marine Services 50% or less owned companies had an interest rate swap agreement maturing in 2015 that has been designated as a cash flow hedge. This instrument calls for the joint venture to pay a fixed interest rate of 1.48% on the amortized notional value of $17.5 million and receive a variable interest rate based on LIBOR on the amortized notional value. As of June 30, 2013, one of the Company’s Inland River Services 50% or less owned companies had four interest rate swap agreements with maturities ranging from 2013 through 2015 that have been designated as cash flow hedges. These instruments call for the joint venture to pay fixed rates of interest ranging from 1.53% to 4.16% on the aggregate amortized notional value of $38.8 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value. Additionally, as of June 30, 2013, one of the Company’s Shipping Services 50% or less owned companies had an interest rate swap agreement maturing in 2017 that has been designated as a cash flow hedge. The instrument calls for the joint venture to pay a fixed interest rate of 2.79% on the amortized notional value of $38.4 million and received a variable interest rate based on LIBOR on the amortized notional value. By entering into these interest rate swap agreements, the Company's joint ventures have converted the variable LIBOR component of certain of their outstanding borrowings to a fixed interest rate.

The Company recognized gains (losses) on derivative instruments designated as cash flow hedges for the six months ended June 30 as follows (in thousands):

	2013		2012
Interest rate swap agreements, effective portion in other comprehensive income (loss)	$	380	$	(671	)
Interest rate swap agreements, ineffective portion in derivative gains (losses), net	—		(19		)
	$	380	$	(690	)

Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments in derivative gains (losses), net for the six months ended June 30 as follows (in thousands):

	2013			2012
Options on equities and equity indices	$	(3,012	)	$	(910	)
Forward currency exchange, option and future contracts	(592		)	373
Interest rate swap agreements	237			(237		)
Commodity swap, option and future contracts:
Exchange traded	(821		)	(1,863		)
Non-exchange traded	1,256			2,252
	$	(2,932	)	$	(385	)

The Company, from time to time, holds positions in publicly traded equity options that convey the right or obligation to engage in a future transaction on the underlying equity security or index. The Company’s investment in equity options primarily includes positions in energy, marine, transportation and other related businesses. These contracts are typically entered into to mitigate the risk of changes in the market value of marketable security positions that the Company is either about to acquire, has acquired or is about to dispose of.

The Company enters and settles forward currency exchange, option and future contracts with respect to various foreign currencies. As of June 30, 2013, the outstanding forward currency exchange contracts translated into a net purchase of foreign currencies with an aggregate U.S. dollar equivalent of $13.1 million. These contracts enable the Company to buy currencies in the future at fixed exchange rates, which could offset possible consequences of changes in currency exchange rates with respect to the Company’s business conducted outside of the United States. The Company generally does not enter into contracts with forward settlement dates beyond twelve to eighteen months.

The Company has entered into various interest rate swap agreements with maturities ranging from 2013 through 2018 that call for the Company to pay fixed interest rates ranging from 2.25% to 3.05% on an aggregate amortized notional value of $221.1 million (including an amortized notional value of €10.9 million or $14.4 million) and receive a variable interest rate based on LIBOR on these notional values. In addition, one of the Company’s Offshore Marine Services 50% or less owned companies has entered into an interest rate swap agreement maturing in 2018 that calls for the joint venture to pay a fixed interest rate of 1.30% on the amortized notional value of $108.0 million and receive a variable interest rate based on LIBOR on the amortized notional value. The general purpose of these interest rate swap agreements is to provide protection against increases in interest rates, which might lead to higher interest costs for the Company or its joint venture.

The Company enters and settles positions in various exchange and non-exchange traded commodity swap, option and future contracts. The Company's ethanol and industrial alcohol manufacturing facility enters into exchange traded positions (primarily corn) to protect its raw material and finished goods inventory balance from market changes. In the Company’s agricultural trading business, fixed price future purchase and sale contracts for sugar are included in the Company’s non-exchange traded derivative positions. The Company enters into exchange traded positions to protect these purchase and sale contracts as well as its inventory balances from market changes. As of June 30, 2013, the net market exposure to corn and sugar under these contracts was not material. The Company also enters into exchange traded positions (primarily natural gas, heating oil, crude oil, gasoline, corn and sugar) to provide value to the Company should there be a sustained decline in the price of commodities that could lead to a reduction in the market values and cash flows of the Company’s Offshore Marine Services, Inland River Services and Shipping Services businesses. As of June 30, 2013, these positions were not material.