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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 9 Months Ended
Sep. 30, 2015
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 nine-months ended September 30, 2015 and the year ended December 31, 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 of the Company that were outstanding as of September 30, 2015 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 income and other (expense), 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, 2015

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 GBP

 

$
9,410

 

$
36

 

Accounts receivable, net

Receive USD/pay JPY

 
5,389

 
12

 

Accounts receivable, net

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Foreign currency exchange contracts:

 

 

 

 

 

 

Receive EUR/pay USD

 

$
26,749

 

$
(160)

 

Accrued liabilities

Receive USD/pay AUD

 
7,263

 
(17)

 

Accrued liabilities

Receive USD/pay ZAR

 
14,921

 
(243)

 

Accrued liabilities

Receive USD/pay MXN

 
7,442

 
(72)

 

Accrued liabilities

Receive USD/pay RUB

 
1,736

 
(21)

 

Accrued liabilities

Receive USD/pay BRL

 
2,284

 
(58)

 

Accrued liabilities

Receive USD/pay CLP

 
1,631

 
(29)

 

Accrued liabilities

Receive USD/pay COP

 
1,120

 
(18)

 

Accrued liabilities

 

 

 

 

 

 

 

December 31, 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 CAD/pay USD

 

$
19,940

 

$
83

 

Accounts receivable, net

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Foreign currency exchange contracts:

 

 

 

 

 

 

Receive EUR/pay USD

 

$
13,265

 

$
(75)

 

Accrued liabilities

Receive USD/pay AUD

 
8,343

 
(48)

 

Accrued liabilities

Receive USD/pay JPY

 
10,620

 
(84)

 

Accrued liabilities

Receive USD/pay ZAR

 
14,760

 
(105)

 

Accrued liabilities

Receive USD/pay MXN

 
4,961

 
(11)

 

Accrued liabilities

Receive USD/pay CLP

 
2,685

 
(10)

 

Accrued liabilities

Receive USD/pay COP

 
2,845

 
(2)

 

Accrued liabilities

 

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

 

 

 

 

 

Amount of gain
recognized in income on
derivatives

 

 

 

 

 

Three-months ended

 

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

 

Location of gain
recognized in income on
derivatives

 

September 30,
2015

 

September 30,
2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange contracts

 

Interest income and other (expense), net

 

$
3,552

 

$
960

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of gain
recognized in income on
derivatives

 

 

 

 

 

 

 

 

 

 

 

Nine-months ended

 

 

 

 

 

 

 

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

 

Location of gain
recognized in income on
derivatives

 

September 30,
2015

 

September 30,
2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange contracts

 

Interest income and other (expense), net

 

$
1,634

 

$
194