Annual report pursuant to Section 13 and 15(d)

DERIVATIVE FINANCIAL INSTRUMENTS

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DERIVATIVE FINANCIAL INSTRUMENTS
 12 Months Ended
Dec. 31, 2013
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 15 — DERIVATIVE FINANCIAL INSTRUMENTS

At December 31, 2013, we had one interest rate swap with a notional amount of approximately $1.5 million, entered into on February 6, 2006, related to the Company’s Series 1999 New York Industrial Revenue Bond, which effectively fixes the rate at 3.99% plus a spread based on the Company’s leverage ratio on this obligation through February 1, 2016.

An interest rate swap entered into on March 19, 2009 related to the Company’s term note issued January 30, 2009, was terminated in the third quarter of 2013 with no significant impact to the results of our operations.

At December 31, 2013 and 2012, the fair value of the interest rate swap was a liability of $0.1 million and $0.2 million, respectively, which is included in other liabilities (See Note 14 - Fair Value). Amounts expected to be reclassified to earnings in the next twelve months are not expected to be significant.

Activity in AOCI related to these derivatives is summarized below:

 

(In thousands)    2013     2012     2011  

Derivative Balance at the Beginning of the Year in AOCI

    $ (142 )    $ (256 )    $ (338 ) 
  

 

 

    

 

 

    

 

 

  

Net Deferral in AOCI of Derivatives:

       

Net (Increase) Decrease in Fair Value of Derivatives

      2        (34 )      (171 ) 

Tax Effect

      —          14        61   
  

 

 

    

 

 

    

 

 

  
     2        (20 )      (110 ) 
  

 

 

    

 

 

    

 

 

  

Net Reclassification from AOCI into Earnings:

       

Reclassification from AOCI into Earnings – Interest Expense

      109        209        298   

Tax Effect

      (38 )      (75 )      (106 ) 
  

 

 

    

 

 

    

 

 

  
     71        134        192   
  

 

 

    

 

 

    

 

 

  
      
  

 

 

    

 

 

    

 

 

  

Net Change in Derivatives for the Year

      73        114        82   
  

 

 

    

 

 

    

 

 

  

Derivative Balance at the End of the Year in AOCI

    $ (69 )    $ (142 )    $ (256 ) 
  

 

 

    

 

 

    

 

 

  

 

To the extent the interest rate swaps are not perfectly effective in offsetting the change in the value of the payments being hedged; the ineffective portion of these contracts is recognized in earnings immediately as interest expense. Ineffectiveness, if any, was not significant for the years ended December 31, 2013, 2012 and 2011. The Company classifies the cash flows from hedging transactions in the same category as the cash flows from the respective hedged items. Amounts from ineffectiveness, if any, to be reclassified during 2014 are not expected to be significant.