Derivative Financial Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Note 7 – Derivative Financial Instruments

We are exposed to market risk from changes in foreign currency exchange rates and short term interest rates. Market risks for changes in interest rates relate primarily to our debt obligations under our Bank of America credit facilities. Foreign currency exchange risks are attributable to sales to foreign customers and purchases from foreign suppliers not denominated in the location’s functional currency, foreign plant operations and intercompany indebtedness, and include exposures to the Euro, Mexican Peso, Canadian Dollar, Hungarian Forint, Ukraine Hryvnia, Japanese Yen, Chinese Renminbi and Korean Won.

The Company regularly enters into derivative contracts with the objective of managing its financial and operational exposure arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses on the financial instruments used to hedge them. We do not enter into derivative financial instruments for speculative or trading purposes. Our hedging relationships are formally documented at the inception of the hedge, and hedges must be highly effective in offsetting changes to future cash flows on hedged transactions both at the inception of a hedge and on an ongoing basis to be designated for hedge accounting treatment. We record the ineffective portion of hedging instruments, if any, to foreign currency gain (loss) in the consolidated condensed statements of income. Though we continuously monitor the hedging program, derivative positions and hedging strategies, foreign currency forward exchange agreements have not always been designated as hedging instruments for accounting purposes.

The Company uses a market approach to value derivative instruments, analyzing observable benchmark rates at commonly quoted intervals for the instrument’s full term.   For information about notional values and expected maturities of derivative instruments, see Part I, Item 3 “Quantitative and Qualitative Disclosures About Market Risk” included in this Report.

Note 7 – Derivative Financial Instruments – Continued

Information related to the recurring fair value measurement of derivative instruments in our consolidated condensed balance sheet as of September 30, 2014 is as follows:

			Asset Derivatives				Liability Derivatives			Net Asset/ (Liabilities)
	Hedge  Designation	Fair ValueHierarchy	Balance Sheet Location		Fair Value		Balance SheetLocation	Fair Value
CRS	Not a hedge	Level 2					Current liabilities	$	2,532
							Non-current  liabilities		6,531
Total CRS								$	9,063	$	(9,063	)
Foreign currency derivatives	Cash flow hedge	Level 2					Current liabilities	$	412	$	(412	)
Foreign currency derivatives	Not a hedge	Level 2		Current assets	$	145				$	145
				Non-current  assets		1,158				$	1,158
Total foreign currency derivatives					$	1,303		$	412	$	891

Information relating to the effect of derivative instruments on our consolidated condensed statements of income is as follows:

	Location	Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014		Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
Foreign currency derivatives	Revaluation of derivatives	$	557		398			581		(694	)
	Product revenues		(129	)	(129	)		—		—
	Cost of sales		64		94			—		—
	Selling, general and administrative		(73	)	(141	)		—		—
	Other comprehensive income		(571	)	(411	)		—		—
	Foreign currency gain (loss)		(606	)	(1,054	)		(426	)	(844	)
Total foreign currency derivatives		$	(758	)	(1,243	)	$	155		(1,538	)
CRS	Revaluation of derivatives	$	(263	)	(690	)	$	(372	)	1,887
Interest rate derivatives	Revaluation of derivatives	$	—		(1	)	$	8		8
	Other comprehensive income		42		81			30		105

We did not incur any hedge ineffectiveness during the nine months ended September 30, 2014 and 2013.