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Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended
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Jun. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Commitment of Foreign Currency Forward Contracts | As at June 30, 2014, the Company was committed to the following foreign currency forward contracts:
|  |  |  |  |  |  |  | Fair Value / |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Carrying |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Amount |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Of Asset |  |  | Expected Maturity |
|  | Contract Amount in |  |  | Average |  |  | (Liability) |  |  | 2014 |  |  | 2015 |
|  | Foreign Currency |  |  | Forward Rate (1) |  |  | $ |  |  | $ |  |  | $ |
Norwegian Kroner |  |  | 667,700 |  |  |  | 6.15 |  |  |  | (400 | ) |  |  | 54,930 |  |  |  | 53,599 |
Singapore Dollar |  |  | 6,000 |  |  |  | 1.26 |  |  |  | 46 |  |  |  | 4,767 |  |  |  | — |
|  |  |  |  |  |  |  |  |  |  | (354 | ) |  |  | 59,697 |  |  |  | 53,599 |
(1) | Average contractual exchange rate represents the contracted amount of foreign currency one U.S. Dollar will buy.
Commitment of Cross Currency Swaps | As at June 30, 2014, the Company was committed to the following cross currency swaps:
|  |  |  |  |  |  |  |  |  | Fair Value / |  |
|  |  |  |  |  |  |  |  |  | Carrying |  |
Notional |  | Notional |  | Floating Rate Receivable |  |  |  | Amount of |  |
Amount |  | Amount |  | Reference |  |  |  | Fixed Rate |  | Asset / |  | Remaining
NOK |  | USD |  | Rate |  | Margin |  | Payable |  | (Liability) |  | Term (years)
700,000 |  | 122,800 |  | NIBOR |  | 4.75% |  | 5.52% |  | (9,537) |  | 1.3
500,000 |  | 89,700 |  | NIBOR |  | 4.00% |  | 4.80% |  | (8,943) |  | 1.6
600,000 |  | 101,400 |  | NIBOR |  | 5.75% |  | 7.49% |  | (6,337) |  | 2.6
700,000 |  | 125,000 |  | NIBOR |  | 5.25% |  | 6.88% |  | (14,513) |  | 2.8
800,000 |  | 143,500 |  | NIBOR |  | 4.75% |  | 5.93% |  | (14,285) |  | 3.6
900,000 |  | 150,000 |  | NIBOR |  | 4.35% |  | 6.43% |  | (7,505) |  | 4.2
1,000,000 |  | 162,200 |  | NIBOR |  | 4.25% |  | 6.28% |  | (2,621) |  | 4.6
|  |  |  |  |  |  |  |  |  | (63,741) |  |
Interest Rate Swap Agreements | As at June 30, 2014, the Company was committed to the following interest rate swap agreements related to its LIBOR-based debt, restricted cash deposits and EURIBOR-based debt, whereby certain of the Company’s floating-rate debt and restricted cash deposits were swapped with fixed-rate obligations or fixed-rate deposits:
|  |  |  |  |  |  |  | Fair Value / |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Carrying |  |  | Weighted- |  |  |  |
|  |  |  |  |  |  |  | Amount of |  |  | Average |  |  | Fixed |
|  | Interest |  |  | Principal |  |  | Asset / |  |  | Remaining |  |  | Interest |
|  | Rate |  |  | Amount |  |  | (Liability) |  |  | Term |  |  | Rate |
|  | Index |  |  | $ |  |  | $ |  |  | (years) |  |  | (%) (1) |
LIBOR-Based Debt: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar-denominated interest rate swaps (2) |  |  | LIBOR |  |  |  | 400,757 |  |  |  | (91,531 | ) |  |  | 22.6 |  |  |  | 4.9 |
U.S. Dollar-denominated interest rate swaps (3) |  |  | LIBOR |  |  |  | 3,653,623 |  |  |  | (362,136 | ) |  |  | 6.1 |  |  |  | 3.6 |
U.S. Dollar-denominated interest rate swaps (4) |  |  | LIBOR |  |  |  | 500,000 |  |  |  | (7,416 | ) |  |  | 1.2 |  |  |  | 3.1 |
LIBOR-Based Restricted Cash Deposit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Dollar-denominated interest rate swaps (2) |  |  | LIBOR |  |  |  | 469,066 |  |  |  | 121,309 |  |  |  | 22.6 |  |  |  | 4.8 |
EURIBOR-Based Debt: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Euro-denominated interest rate swaps (5) (6) |  |  | EURIBOR |  |  |  | 330,845 |  |  |  | (44,034 | ) |  |  | 6.5 |  |  |  | 3.1 |
|  |  |  |  |  |  |  |  |  |  | (383,808 | ) |  |  |  |  |  |  |  |
| (1) | Excludes the margins the Company pays on its variable-rate debt, which, as of June 30, 2014, ranged from 0.3% to 4.5%.
| (2) | Principal amount reduces quarterly.
| (3) | Principal amount of $200 million is fixed at 2.14%, unless LIBOR exceeds 6%, in which case the Company pays a floating rate of interest.
| (4) | Interest rate swap with an aggregate principal amount of $180 million is being used to economically hedge expected interest payments on new debt that is planned to be outstanding from 2016 to 2028. The interest rate swap is subject to mandatory early termination in 2014 whereby the swap will be settled based on its fair value at that time. Interest rate swaps with an aggregate principal amount of $320 million are being used to economically hedge expected interest payments on new debt that is planned to be outstanding from 2016 to 2021. These interest rate swaps are subject to mandatory early termination in 2016 whereby the swaps will be settled based on their fair value at that time.
| (5) | Principal amount reduces monthly to 70.1 million Euros ($96.0 million) by the maturity dates of the swap agreements.
| (6) | Principal amount is the U.S. Dollar equivalent of 241.7 million Euros.
Location and Fair Value Amounts of Derivative Instruments | The following table presents the location and fair value amounts of derivative instruments, segregated by type of contract, on the Company’s consolidated balance sheets.
|  | Current |  |  |  |  |  |  |  |  | Current |  |  |  |
|  | Portion of |  |  |  |  |  |  |  |  | Portion of |  |  |  |
|  | Derivative |  |  | Derivative |  |  | Accrued |  |  | Derivative |  |  | Derivative |
|  | Assets |  |  | Assets |  |  | Liabilities |  |  | Liabilities |  |  | Liabilities |
As at June 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives not designated as a cash flow hedge: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts |  |  | 696 |  |  |  | 11 |  |  |  | — |  |  |  | (741 | ) |  |  | (320 | )
Interest rate swap agreements |  |  | 17,200 |  |  |  | 105,488 |  |  |  | (22,281 | ) |  |  | (173,920 | ) |  |  | (310,295 | )
Cross currency swap agreements |  |  | 537 |  |  |  | — |  |  |  | (39 | ) |  |  | (2,808 | ) |  |  | (61,431 | )
Stock purchase warrants |  |  | — |  |  |  | 8,051 |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 18,433 |  |  |  | 113,550 |  |  |  | (22,320 | ) |  |  | (177,469 | ) |  |  | (372,046 | )
As at December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives not designated as a cash flow hedge: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts |  |  | 482 |  |  |  | 12 |  |  |  | — |  |  |  | (1,819 | ) |  |  | (155 | )
Interest rate swap agreements |  |  | 21,779 |  |  |  | 69,785 |  |  |  | (22,025 | ) |  |  | (140,503 | ) |  |  | (248,091 | )
Cross currency swap agreements |  |  | 779 |  |  |  | — |  |  |  | 3 |  |  |  | (1,677 | ) |  |  | (51,324 | )
|  |  | 23,040 |  |  |  | 69,797 |  |  |  | (22,022 | ) |  |  | (143,999 | ) |  |  | (299,570 | )
Effect of Gain (Loss) on Derivatives Not Designated as Hedging Instruments | The effect of the gains and losses on derivatives not designated as hedging instruments in the consolidated statements of income are as follows:
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
|  | $ |  |  | $ |  |  | $ |  |  | $ |
Realized (losses) gains relating to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap agreements |  |  | (30,755 | ) |  |  | (30,899 | ) |  |  | (60,245 | ) |  |  | (61,251 | )
Interest rate swap agreement terminations |  |  | — |  |  |  | (4,187 | ) |  |  | 1,000 |  |  |  | (4,187 | )
Foreign currency forward contracts |  |  | 110 |  |  |  | (1,873 | ) |  |  | (1,175 | ) |  |  | (1,452 | )
|  |  | (30,645 | ) |  |  | (36,959 | ) |  |  | (60,420 | ) |  |  | (66,890 | )
Unrealized (losses) gains relating to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap agreements |  |  | (39,096 | ) |  |  | 96,911 |  |  |  | (64,494 | ) |  |  | 116,115 |
Foreign currency forward contracts |  |  | (1,926 | ) |  |  | (3,917 | ) |  |  | 1,125 |  |  |  | (6,979 | )
Stock purchase warrants |  |  | (3,664 | ) |  |  | — |  |  |  | 1,210 |  |  |  | — |
|  |  | (44,686 | ) |  |  | 92,994 |  |  |  | (62,159 | ) |  |  | 109,136 |
Total realized and unrealized (losses) gains on derivative instruments |  |  | (75,331 | ) |  |  | 56,035 |  |  |  | (122,579 | ) |  |  | 42,246 |
Effect of Loss on Cross Currency Swaps | The effect of the loss on cross currency swaps on the consolidated statements of (loss) income is as follows:
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
|  | $ |  |  | $ |  |  | $ |  |  | $ |
Realized gain on partial termination of cross currency swap |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,800 |
Realized (losses) gains |  |  | (144 | ) |  |  | 503 |  |  |  | (289 | ) |  |  | 1,565 |
Unrealized losses |  |  | (24,803 | ) |  |  | (16,399 | ) |  |  | (11,481 | ) |  |  | (54,353 | )
Total realized and unrealized losses on cross currency swaps |  |  | (24,947 | ) |  |  | (15,896 | ) |  |  | (11,770 | ) |  |  | (45,988 | )

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