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DERIVATIVE FINANCIAL INSTRUMENTS
 9 Months Ended
Sep. 30, 2015
DERIVATIVE FINANCIAL INSTRUMENTS
4. DERIVATIVE FINANCIAL INSTRUMENTS

We enter into foreign currency forward contracts to offset the earnings impact that foreign exchange rate fluctuations would otherwise have on certain monetary liabilities that are denominated in nonfunctional currencies.

Cash Flow Hedging Instruments

We enter into foreign currency forward contracts that are designated as cash flow hedges. The settlement of these derivatives results in reclassifications from accumulated other comprehensive loss to earnings for the period in which the settlement of these instruments occur. The maximum period for which we hedge our cash flow using these instruments is 12 months, and accordingly, at September 30, 2015, all of our open foreign currency forward contracts had maturities of one year or less. The total notional value of our foreign currency exchange contracts designated as cash flow hedges at September 30, 2015 was $24,900, and such contracts have varying terms expiring through April 2016. At September 30, 2014, our foreign currency forward contracts either were not designated as cash flow hedges or did not qualify for hedge accounting.

The impact from foreign exchange derivative instruments designated as cash flow hedges was as follows for the periods indicated:

 

     Quarter Ended
September 30,		      Nine Months Ended
September 30,		  
     2015      2014      2015      2014  

Gain recorded in accumulated other comprehensive loss

    $ 1,294         —        $ 3,192         —     

Gain reclassified from accumulated other comprehensive loss into earnings

    $ (356 )       —         $ (1,910 )       —     

At September 30, 2015, we expected an estimated $1,666 pre-tax gain to be reclassified into earnings to reflect the fixed prices obtained from foreign exchange hedging within the next 12 months.

Derivatives Not Designated as Hedging Instruments

We have also entered into foreign currency forward contracts that are either not designated as hedges or do not qualify for hedge accounting. These derivative instruments were effective economic hedges for all of the periods presented. The fair value gains and losses on these contracts are recognized in earnings as a component of selling, general and administrative expenses. The total notional value of our foreign currency exchange contracts not designated as hedging instruments at September 30, 2015 was $14,600, and such contracts have varying terms expiring through November 2015.

We recognized a gain of $955 and $2,127 from foreign currency forward contracts not designated as hedging instruments in our condensed consolidated unaudited statements of income for the quarters ended September 30, 2015 and 2014, respectively. We recognized a gain of $2,249 and $572 from foreign currency forward contracts not designated as hedging instruments in our condensed consolidated unaudited statements of income for the nine months ended September 30, 2015 and 2014, respectively.

The following table summarizes the fair value of derivative instruments, which consist solely of foreign currency forward contracts, included in other current assets in our condensed consolidated unaudited balance sheets. See Note 5.

 

     Asset Derivatives  
     September 30, 2015      December 31, 2014  

Derivatives designated as hedging instruments

    $ 1,137       $ 384   

Derivatives not designated as hedging instruments

      268         260   
  

 

 

     

 

 

  

Total asset derivative instruments

    $ 1,405       $ 644