XML 78 R21.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Derivative Instruments And Hedging Activities | 9 Months Ended
--- | ---
Sep. 30, 2014
Derivative Instruments And Hedging Activities [Abstract] |
Derivative Instruments And Hedging Activities | Note 1 5 — Derivative Instruments and Hedging Activities Our operations are exposed to market risk associated with interest rates and foreign currency exchange rates. Our risk management activities involve the use of derivative financial instruments to hedge the impact of market risk exposure related to variable interest rates and foreign currency exchange rates. All derivatives are reflected in the accompanying condensed consolidat ed balance sheets at fair value. We engage solely in cash flow hedges. Hedges of cash flow exposure are entered into to hedge a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability. Changes in the derivative fair values that are designated as cash flow hedges are deferred to the extent that the hedges are effective. These fair value changes are recorded as a component of Accumulated OCI (a component of shareholders’ equity) until the hedged transactions occur and are recognized in earnings. The ineffective portion of changes in the fair value of cash flow hedges is recognized immediately in earnings. In addition, any change in the fair value of a derivative that does not qualify for hedge accounting is recorded in earnings in the period in which the change occurs. For additional information regarding our accounting for derivatives, see Notes 2 and 1 6 t o our 201 3 Form 10-K. Interest Rate Risk From time to time, w e enter into interest rate swaps to stabilize cash flows related to our long-term debt subject to variable interest rates. Changes in the fair value of an interest rate swap are deferred to the extent the swap is effective. These changes are recorded as a component of Accumulated OCI until the anticipated interest payments occur and are recognized in interest expense. The ineffective portion of the interest rate swap, if any, is recognized immediately in earnings within the line titled “Net interest expense.” The amount of ineffectiveness associated with our interest rate swap contracts was immaterial for all periods presented. In September 2013, we entered into interest rate swap contracts to fix the interest rate on $148.1 million of our Term Loan (Note 6). These monthly contracts beg a n in October 2013 and extend through October 2016. Foreign Currency Exchange Rate Risk Because we operate in various regions in the world, we conduct a portion of our business in currencies other than the U.S. dollar. We entered into various foreign currency exchange contract s to stabilize expected cash outflows relating to certain vessel charters that are denominated in British pounds and Norwegian kroner. In January 2013, we entered into foreign currency exchange contracts to hedge through September 2017 the foreign currency exposure associated with the Grand Canyon charter payments ($104.6 million) denominated in Norwegian kroner (NOK 591.3 million). In February 2013, we entered into similar foreign currency exchange contracts to hedge our foreign currency exposure with respect to the Grand Canyon II and Grand Canyon III charter payments ($100.4 million and $98.8 million, respectively) denominated in Norwegian kroner (NOK 594.7 million and NOK 595.0 million, respectively), through July 2019 and February 2020, respectively. These contracts currently qualify for hedge accounting treatment. All of our remaining foreign exchange contracts that were not accounted for as hedge contracts have been settled. We had no foreign currency exchange contracts for vessel charters denominated in British pounds as of September 30, 2014. Quantitative Disclosures Related to Derivative Instruments As a result of the announcement in December 2012 of the sale of ERT, we de-designated all of our then remaining oil and natural gas derivative contracts as hedging instruments. In addition, under the terms of our former credit agreement (Note 6), we were required to use a portion of the proceeds from the sale of ERT, as well as the sale of the Caesar and Express vessels, to make payments to reduce our indebtedness. Because of the probability that the former t erm l oan debt would be totally repaid before the expiration of our then existing interest rate swaps, we also concluded that th ose swaps no longer qualified as cash flow hedges. The mark-to-market adjustments related to our commodity derivative contracts and interest rate swaps are reflected in “Loss on commodity derivative contracts” and “Other expense, net,” respectively, in the accompanying condensed consolidated statements of operations. The following table presents the fair value and balance sheet classification of our derivative instruments that were not designated as hedging instruments (in thousands):
|  | September 30, 2014 |  | December 31, 2013 |
|  | Balance Sheet |  | Fair |  | Balance Sheet |  | Fair |
|  | Location |  | Value |  | Location |  | Value |
Asset Derivatives: |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Other current assets | $ | - |  | Other current assets | $ | 69 |
|  |  | $ | - |  |  | $ | 69 |
The following table presents the fair value and balance sheet classification of our derivative instruments that were designated as hedging instruments (in thousands):
|  | September 30, 2014 |  | December 31, 2013 |
|  | Balance Sheet |  | Fair |  | Balance Sheet |  | Fair |
|  | Location |  | Value |  | Location |  | Value |
Asset Derivatives: |  |  |  |  |  |  |  |  |
Interest rate swaps |  | Other assets, net | $ | 578 |  | Other assets, net | $ | 446 |
|  |  | $ | 578 |  |  | $ | 446 |
Liability Derivatives: |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Accrued liabilities | $ | 5,255 |  | Accrued liabilities | $ | 1,905 |
Interest rate swaps |  | Accrued liabilities |  | 662 |  | Accrued liabilities |  | 746 |
Foreign exchange contracts |  | Other non-current liabilities |  | 17,235 |  | Other non-current liabilities |  | 13,166 |
|  |  | $ | 23,152 |  |  | $ | 15,817 |
Ineffectiveness associated with our derivatives was immaterial for all periods presented. The following tables present the impact that derivative instruments designated as cash flow hedges had on our Accumulated OCI (net of tax) and our condensed consolidated statements of operations (in thousands). We estimate that as of September 30, 2014 $3.8 million of unrealized losses in Accumulated OCI associated with our derivatives is expected to be reclassified into earnings within the next 12 months.
|  | Gain (Loss) Recognized in OCI |
|  | on Derivatives, Net of Tax |
|  | (Effective Portion) |
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Foreign exchange contracts | $ | (5,713) |  | $ | 1,186 |  | $ | (4,823) |  | $ | (9,645) |
Interest rate swaps |  | 255 |  |  | (202) |  |  | 141 |  |  | (202) |
| $ | (5,458) |  | $ | 984 |  | $ | (4,682) |  | $ | (9,847) |
|  |  |  |  | Gain (Loss) Reclassified from |
|  |  |  |  | Accumulated OCI into Earnings |
|  | Location of Gain (Loss) |  |  | (Effective Portion) |
|  | Reclassified from |  |  | Three Months Ended |  |  | Nine Months Ended |
|  | Accumulated OCI into Earnings |  |  | September 30, |  |  | September 30, |
|  | (Effective Portion) |  |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Interest rate swaps |  | Net interest expense |  | $ | (215) |  | $ | - |  | $ | (646) |  | $ | - |
Foreign exchange contracts |  | Cost of sales |  |  | (597) |  |  | (396) |  |  | (1,434) |  |  | (900) |
|  |  |  | $ | (812) |  | $ | (396) |  | $ | (2,080) |  | $ | (900) |
The following table presents the impact that derivative instruments not designated as hedges had on our condensed consolidated statement s of operations (in thousands):
|  |  |  |  | Gain (Loss) Recognized |
|  |  |  |  | in Earnings on Derivatives |
|  | Location of Gain (Loss) |  |  | Three Months Ended |  |  | Nine Months Ended |
|  | Recognized in Earnings |  |  | September 30, |  |  | September 30, |
|  | on Derivatives |  |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Oil and natural gas commodity contracts |  | Loss on commodity derivative contracts |  | $ | - |  | $ | - |  | $ | - |  | $ | (14,113) |
Interest rate swaps |  | Other expense, net |  |  | - |  |  | - |  |  | - |  |  | (86) |
Foreign exchange contracts |  | Other expense, net |  |  | - |  |  | 498 |  |  | 7 |  |  | (693) |
|  |  |  | $ | - |  | $ | 498 |  | $ | 7 |  | $ | (14,892) |

X
- Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5618551-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5708775-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624181-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624258-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624163-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5708773-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624177-113959 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41620-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5579245-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5580258-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5579240-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41641-113959 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41638-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624171-113959 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration