v2.4.0.6
Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2013
Derivative Financial Instruments [Abstract]  
Derivative Financial Instruments
5. Derivative Financial Instruments
 
The majority of our travel programs take place outside of the United States and most foreign suppliers require payment in currency other than the U.S. dollar. Accordingly, we are exposed to foreign currency risk relative to changes in foreign currency exchange rates between those currencies and the U.S. dollar for our non-directly delivered programs. We use forward contracts that allow us to acquire the foreign currency at a fixed price for a specified point in time to provide a hedge against foreign currency risk. All of our derivatives are cash flow hedges and at March 31, 2013, all contracts qualified for cash flow hedge accounting.

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income or loss and reclassified into earnings in the same period during which the hedged transaction is recognized in earnings, which is primarily during the second and third quarters of the year when our student travel programs occur. Gains or losses representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

At March 31, 2013, the following forward contracts were outstanding (in thousands):
 
Notional Amount
Matures
Forward contracts: 
     Euro
          10,400
April 2013 - March 2014
     Australian dollar
            6,100
April 2013 - July 2014
     British pound
            2,570
April 2013 - June 2014
     Canadian dollar
            1,610
April 2013 - June 2014
     New Zealand dollar
               405
May 2013 - July 2013

The fair value of our forward contracts were as follows (in thousands):
 
March 31, 2013
 
Derivatives designated as hedging instruments
 
Total Net
 
Assets
 
Liabilities
 
Assets
 
Forward contracts
 
$
401
 
 
$
346
 
 
$
55
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
Derivatives designated as hedging instruments
 
Total Net
 
 
Assets
 
 
Liabilities
 
 
Assets
 
Forward contracts
 
$
952
 
 
$
115
 
 
$
837
 
 
The net derivatives assets at March 31, 2013 and December 31, 2012 are reported in the consolidated balance sheet as current and long-term foreign currency exchange contracts.

The following table summarizes the balances of AOCI and the gain (loss) recognized in OCI for derivatives designated as hedging instruments (in thousands):
 
Accumulated Other Comprehensive Income (Loss)
 
Foreign currency exchange contracts
 
2013
 
2012
 
Balance, January 1,
 
$
544
 
 
$
(1,153
)
Other comprehensive income (loss), net of income taxes
 
 
(509
)
 
 
933
 
Balance, March 31,
 
$
35
 
 
$
(220
)
 
Unrealized gains on forward contracts recorded in AOCI at March 31, 2013, which are expected to be realized in net revenue during the next 12 months, were approximately $32 thousand. This amount was computed using the fair value of the cash flow hedges at March 31, 2013, and may change before actual reclassification from AOCI.
 
For the three months ended March 31, 2013 and 2012, there were no gains or losses recognized in the income statement for derivatives designated as hedging instruments.