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DERIVATIVE FINANCIAL INSTRUMENTS
 9 Months Ended
Sep. 30, 2016
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 had 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 occurs. The maximum period for which we hedge our cash flow using these instruments is 12 months. Accordingly, at September 30, 2016, 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, 2016 was $22,600, and such contracts have varying terms expiring through March 2017.

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,		  
     2016      2015      2016      2015  

Gain (loss) recorded in accumulated other comprehensive loss

    $ 536       $ 1,294       $ (2,033 )     $ 3,192   

(Loss) gain reclassified from accumulated other comprehensive loss into earnings

    $ 129       $ (356 )     $ 674       $ (1,910 ) 

At September 30, 2016, we expected an estimated $11 of 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 notional value of our foreign currency exchange contract not designated as a hedging instrument at September 30, 2016 was $2,900, and such contract expired in October 2016.

We recognized gains of $75 and $955 from foreign currency forward contracts not designated as hedging instruments in our condensed consolidated unaudited statements of income for the quarters ended September 30, 2016 and 2015, respectively. We recognized a (loss) gain of $(389) and $2,249 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, 2016 and 2015, 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, 2016      December 31, 2015  

Derivatives designated as hedging instruments

    $ 269       $ 923   

Derivatives not designated as hedging instruments

      —           326   
  

 

 

     

 

 

  

Total asset derivative instruments

    $ 269       $ 1,249   
     Liability Derivatives  
     September 30, 2016      December 31, 2015  

Derivatives designated as hedging instruments

    $ 91       $ 3   

Derivatives not designated as hedging instruments

      27         4   
  

 

 

     

 

 

  

Total liability derivative instruments

    $ 118       $ 7