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Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2014
Derivative Financial Instruments  
Derivative Financial Instruments

Note 7 — Derivative Financial Instruments

 

We use derivative financial instruments to minimize the impact of foreign exchange rate changes on earnings and cash flows. In the normal course of business, our operations are exposed to fluctuations in foreign exchange rates. In order to reduce the effect of fluctuating foreign currencies on short-term foreign currency-denominated intercompany transactions and other known foreign currency exposures, we enter into monthly forward contracts. We do not use derivative financial instruments for trading or speculative purposes. Our forward contracts are not expected to subject us to material risks due to exchange rate movements because gains and losses on these contracts are intended to offset exchange gains and losses on the underlying assets and liabilities. The forward contracts are marked-to-market through earnings. We conduct our derivative transactions with highly rated financial institutions in an effort to mitigate any material counterparty risk.

 

 

 

As of March 31, 2014

 

(in thousands)

 

Component of

 

Fair
Value

 

Maturity
 Dates

 

Notional
Amount

 

Not Designated as Hedges under ASC 815

 

 

 

 

 

 

 

 

 

Foreign currency exchange forwards

 

Prepaid and other current assets

 

$

—

 

April 2014

 

$

6,400

 

Foreign currency collar

 

Prepaid and other current assets

 

573

 

October 2014

 

34,069

 

Total Derivative Instruments

 

 

 

$

573

 

 

 

$

40,469

 

 

 

 

As of December 31, 2013

 

(in thousands)

 

Component of

 

Fair
Value

 

Maturity
 Dates

 

Notional
Amount

 

Not Designated as Hedges under ASC 815

 

 

 

 

 

 

 

 

 

Foreign currency exchange forwards

 

Prepaid and other current assets

 

$

1

 

January 2014

 

$

4,700

 

Foreign currency collar

 

Prepaid and other current assets

 

906

 

October 2014

 

34,069

 

Total Derivative Instruments

 

 

 

$

907

 

 

 

$

38,769

 

 

 

 

 

 

Amount of realized net gain (loss)

 

 

 

 

 

and changes in the fair value of

 

 

 

 

 

derivatives

 

 

 

 

 

For the three months ended March

 

 

 

Location of realized net gain (loss) and

 

31,

 

(in thousands)

 

changes in the fair value of derivatives

 

2014

 

2013

 

Foreign currency exchange forwards

 

Other operating, net

 

$

(95

)

$

228

 

Foreign currency collar

 

Other operating, net

 

(333

)

—

 

 

These contracts were valued using market quotes in the secondary market for similar instruments (fair value Level 2, please see our footnote Fair Value Measurements).

 

The weighted average notional amount of derivative contracts outstanding during the three months ended March 31, 2014 and 2013 was approximately $11.5 million and $2.4 million, respectively.