Financial Instruments and Derivatives

3 Months Ended

Mar. 31, 2013

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Financial Instruments and Derivatives

Note 7: Financial Instruments and Derivatives

The following table sets forth the carrying amounts and fair values of the Company’s significant financial instruments for which the carrying amount differs from the fair value.

	March 31, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, net of current portion	$	947,568	$	1,067,086	$	1,099,454	$	1,214,292

The carrying value of cash and cash equivalents, short-term debt and long-term variable-rate debt approximates fair value. The fair value of long-term debt is determined based on trade information in the financial markets of the Company’s public debt or is determined by discounting future cash flows using interest rates available to the Company for issues with similar terms and maturities. It is considered a Level 2 fair value measurement.

Cash Flow Hedges

At March 31, 2013 and December 31, 2012, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows. To the extent considered effective, the changes in fair value of these contracts are recorded in other comprehensive income and reclassified to income or expense in the period in which the hedged item impacts earnings.

Commodity Cash Flow Hedges

The Company has entered into certain derivative contracts to manage the cost of anticipated purchases of natural gas, aluminum and old corrugated containers. At March 31, 2013, natural gas swaps covering approximately 6.1 million MMBTUs were outstanding. These contracts represent approximately 81% and 45% of anticipated U.S. and Canadian usage for the remainder of 2013 and 2014, respectively. Additionally, the Company had swap contracts covering 3,121 metric tons of aluminum representing approximately 54% of anticipated usage for the remainder of 2013, and 5,900 short tons of old corrugated containers representing approximately 2% of anticipated usage for 2013. The fair values of the Company’s commodity cash flow hedges were in loss positions of $(2,765) and $(6,286) at March 31, 2013 and December 31, 2012, respectively. The amount of the loss included in accumulated other comprehensive loss at March 31, 2013, that is expected to be reclassified to the income statement during the next twelve months is $(2,173).

Foreign Currency Cash Flow Hedges

The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales and purchases forecast to occur in 2013. The net positions of these contracts at March 31, 2013 were as follows (in thousands):

Currency	Action	Quantity
Colombian peso	purchase		14,749,211
Mexican peso	purchase		268,039
Canadian dollar	purchase		39,575
Turkish lira	purchase		3,389
British pound	purchase		2,144
Polish zloty	purchase		1,452
New Zealand dollar	sell		(877	)
Euro	sell		(2,208	)
Australian dollar	sell		(2,902	)

The fair value of these foreign currency cash flow hedges was $(214) and $(4,483) at March 31, 2013 and December 31, 2012, respectively. During the first three months of 2013, certain foreign currency cash flow hedges related to construction in progress were settled as the related capital expenditures were made. A loss of $75 was reclassified from accumulated other comprehensive loss and netted against the carrying value of assets during the three-month period ending March 31, 2013. The amount of the loss included in accumulated other comprehensive loss at March 31, 2013 expected to be reclassified to the income statement during the next twelve months is $(145).

Other Derivatives

The Company routinely enters into forward contracts or swaps to economically hedge the currency exposure of intercompany debt and existing foreign currency denominated receivables and payables. The Company does not apply hedge accounting treatment under ASC 815 for these instruments. As such, changes in fair value are recorded directly to income and expense in the periods that they occur. The net positions of these contracts at March 31, 2013, were as follows (in thousands):

Currency	Action	Quantity
Euro	purchase		5,732
Canadian dollar	purchase		4,213
British pound	purchase		1,571
Colombian peso	sell		(15,482,812	)

The fair value of the Company’s other derivatives was $501 and $708 at March 31, 2013 and December 31, 2012, respectively.

The Company has determined all hedges to be highly effective and as a result no material ineffectiveness has been recorded.

The following table sets forth the location and fair values of the Company’s derivative instruments at March 31, 2013 and December 31, 2012:

Description	Balance Sheet Location	March 31, 2013			December 31, 2012
Derivatives designated as hedging instruments:
Commodity Contracts	Prepaid expenses	$	675		$	201
Commodity Contracts	Other assets	$	41		$	—
Commodity Contracts	Accrued expenses and other	$	(2,736	)	$	(4,760	)
Commodity Contracts	Other liabilities	$	(745	)	$	(1,727	)
Foreign Exchange Contracts	Prepaid expenses	$	1,015		$	725
Foreign Exchange Contracts	Accrued expenses and other	$	(1,229	)	$	(5,208	)
Derivatives not designated as hedging instruments:
Foreign Exchange Contracts	Prepaid expenses	$	472		$	679
Foreign Exchange Contracts	Other assets	$	47		$	36
Foreign Exchange Contracts	Accrued expenses and other	$	(18	)	$	(7	)

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three months ended March 31, 2013 and April 1, 2012:

Description	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)			Location of Gain or (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)			Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Three months ended March 31, 2013
Derivatives in Cash Flow Hedging Relationships:
Foreign Exchange Contracts	$	4,256		Net sales	$	444		Net sales	$	—
				Cost of sales	$	(403	)
Commodity Contracts	$	1,738		Cost of sales	$	(1,656	)	Cost of sales	$	(127	)
Three months ended April 1, 2012
Derivatives in Cash Flow Hedging Relationships:
Foreign Exchange Contracts	$	3,187		Net sales	$	96		Net sales	$	—
				Cost of sales	$	1,181
Commodity Contracts	$	(4,850	)	Cost of sales	$	(3,257	)	Cost of sales	$	—

Derivatives not designated as hedging instruments:	Location of Gain or (Loss) Recognized in Income Statement	Gain or (Loss) Recognized
Three months ended March 31, 2013
Foreign Exchange Contracts	Cost of sales	$	(196	)
	Selling, general and administrative	$	(11	)
Three months ended April 1, 2012
Foreign Exchange Contracts	Cost of sales	$	1,373
	Selling, general and administrative	$	23