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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 9 Months Ended
Sep. 30, 2014
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

6.                                    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

 

The Company is exposed to foreign currency exchange rate risks related primarily to its foreign business operations. During the three- and nine-months ended September 30, 2014, the Company entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries’ non-functional currency denominated assets and liabilities. All foreign currency exchange contracts entered into by the Company as of September 30, 2014 have terms of one month or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes.

 

The Company has not designated its foreign currency exchange contracts as hedge transactions under ASC 815. Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in interest and other (expense) income, net, in the condensed consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item.

 

The notional amount and fair value of all outstanding foreign currency derivative instruments in the condensed consolidated balance sheets consist of the following at:

 

 

 

September 30, 2014

 

Derivatives not designated as
hedging instruments under
FASB ASC 815-20

 

Notional
Amount

 

Fair
Value

 

Balance Sheet Location

 

 

 

 

 

 

 

 

 

 Assets:

 

 

 

 

 

 

 

  Foreign currency exchange contracts:

 

 

 

 

 

 

 

       Receive USD/pay AUD

 

$

9,170

 

$

2

 

Accounts receivable, net

 

       Receive USD/pay JPY

 

15,414

 

39

 

Accounts receivable, net

 

       Receive USD/pay ZAR

 

13,169

 

107

 

Accounts receivable, net

 

       Receive USD/pay CLP

 

2,069

 

8

 

Accounts receivable, net

 

       Receive USD/pay COP

 

2,225

 

3

 

Accounts receivable, net

 

 

 

 

 

 

 

 

 

 Liabilities:

 

 

 

 

 

 

 

  Foreign currency exchange contracts:

 

 

 

 

 

 

 

       Receive EUR/pay USD

 

$

12,808

 

$

(50)

 

Accrued liabilities

 

       Receive CAD/pay USD

 

13,444

 

(70)

 

Accrued liabilities

 

       Receive USD/pay MXN

 

3,279

 

(7)

 

Accrued liabilities

 

 

 

 

 

 

 

 

 

 

The Company had no foreign currency exchange contracts outstanding at December 31, 2013.

 

The net losses on derivative instruments in the condensed consolidated statements of income were as follows:

 

 

 

 

 

Amount of loss
recognized in income on
derivatives

 

 

 

 

 

Three-months ended

 

Derivatives not designated as
hedging instruments under
FASB ASC 815-20

 

Location of loss
recognized in income on
derivatives

 

September 30,
2014

 

September 30,

2013

 

Foreign currency exchange contracts

 

Interest and other income (expense), net

 

  $

960  

 

  $

-    

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of loss
recognized in income on
derivatives

 

 

 

 

 

Nine-months ended

 

Derivatives not designated as
hedging instruments under
FASB ASC 815-20

 

Location of loss
recognized in income on
derivatives

 

September 30,
2014

 

September 30,

2013

 

Foreign currency exchange contracts

 

Interest and other income (expense), net

 

  $

194  

 

  $

-