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FINANCIAL DERIVATIVE INSTRUMENTS
 3 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
FINANCIAL DERIVATIVE INSTRUMENTS
FINANCIAL DERIVATIVE INSTRUMENTS
Commodity Pricing Risk
As of March 31, 2019, the Company was party to commodity swap contracts for specific commodities with notional amounts of approximately $34.0 million. The Company uses commodity swap contracts to mitigate the risks associated with fluctuations in commodity prices impacting its cash flows related to inventory purchases from suppliers. The Company does not hedge all commodity price risk.
At inception, the Company designated the commodity swap contracts as cash flow hedges. The contracts mature at specified monthly settlement dates through December 2019. The effective portion of the hedging transaction is recognized in Accumulated Other Comprehensive Income (“AOCI”) and transferred to earnings when the forecasted hedged transaction takes place or when the forecasted hedged transaction is no longer probable to occur.
Financial Statement Presentation
As of March 31, 2019 and December 31, 2018, the fair value carrying amount of the Company’s derivative instruments were recorded as follows (in thousands):
 
 
 
 
Asset / (Liability) Derivatives
 
 
Balance Sheet Caption
 
March 31,
2019
 
December 31,
2018
Derivatives designated as hedging instruments
 
 
 
 
 
 
Commodity swap contracts
 
Prepaid expenses and other
 
$
31

 
$
17

Commodity swap contracts
 
Other accrued liabilities
 
(2,142
)
 
(1,146
)
Total derivatives designated as hedging instruments
 
 
 
$
(2,111
)
 
$
(1,129
)

The following table summarizes the gain or loss recognized in AOCI as of March 31, 2019 and December 31, 2018 and the amounts reclassified from AOCI into earnings for the three months ended March 31, 2019 and 2018 (in thousands):
 
 
Amount of Gain (Loss) Recognized in
AOCI on Derivatives
(Effective Portion, net of tax)
 
Location of Gain (Loss) Reclassified from AOCI into Earnings
(Effective Portion)
 
Amount of Gain (Loss) Reclassified from AOCI into Earnings
 
 
 
 
 
 
March 31,
2019
 
December 31,
2018
 
 
March 31, 2019
 
March 31,
2018
Derivatives instruments
 
 
 
 
 
 
 
 
 
 
Commodity swap contracts
 
$
(1,579
)
 
$
(765
)
 
Cost of sales
 
$
(168
)
 
$
—


Over the next 12 months, the Company expects to reclassify approximately $2.1 million of pretax deferred losses, related to the commodity swap contracts, from AOCI to cost of sales as inventory purchases are settled.