Fair Value Measurements

Trading Securities

On August 13, 2015 the Company entered into an agreement to sell its RDX™ Storage product line, including $1.5 million of associated inventory, to Sphere 3D for approximately $6 million of value. Under terms of the agreement, Imation received approximately 1.5 million shares of Sphere 3D common stock which resulted in a gain of $4.8 million for the three and nine months ended September 30, 2015. The consideration received is subject to certain adjustments if the market value of the Sphere 3D shares change in value. For the three and nine months ended September 30, 2015 the Company recorded a $0.3 million loss on the value of the 1.5 million Sphere 3D shares held. The loss was recorded in other (income) expense in the Condensed Consolidated Statement of Operations as the investments are classified as trading securities under applicable accounting criteria. The estimated fair value of the shares held is $3.3 million and is included in other current assets in our Condensed Consolidated Balance Sheet as of September 30, 2015.

Derivative Financial Instruments

Cash Flow Hedges

We attempt to substantially mitigate the risk that forecasted cash flows denominated in foreign currencies may be adversely affected by changes in the currency exchange rates through the use of option, forward and combination option contracts. Gains and losses related to cash flow hedges are deferred in accumulated other comprehensive loss with a corresponding asset or liability. When the hedged transaction occurs, the gains and losses in accumulated other comprehensive loss are reclassified into the Condensed Consolidated Statements of Operations in the same line as the item being hedged. The following table sets forth our cash flow hedges which are measured at fair value on a recurring basis.



	September 30, 2015							December 31, 2014
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Derivative assets:
Foreign currency forward contracts	—		0.1			—		—		7.3		—
Derivative liabilities:
Foreign currency forward contracts	—		(0.8		)	—		—		—		—
Total net derivative (liabilities) assets	$	—	$	(0.7	)	$	—	$	—	$	7.3	$	—

Other Derivative Instruments

We use foreign currency forward contracts to manage the foreign currency exposure related to our monetary assets and liabilities denominated in foreign currencies. We record the estimated fair value of these forward contracts in other current assets or other current liabilities on our Condensed Consolidated Balance Sheets and, because we do not receive hedge accounting for these derivatives, changes in their value are recognized every reporting period in the Condensed Consolidated Statements of Operations.

For the three months ended September 30, 2015 and 2014, we recorded net foreign currency gains of $0.9 million and losses of $1.5 million, respectively, in other (income) expense in the Condensed Consolidated Statements of Operations. These results reflect changes in foreign exchange rates on foreign denominated assets and liabilities and are net of losses of $0.5 million and $0.7 million from the related foreign currency forward contracts for the three months ended September 30, 2015 and 2014, respectively.

For the nine months ended September 30, 2015 and 2014, we recorded net foreign currency losses of $0.3 million and $1.9 million, respectively, in other (income) expense in the Condensed Consolidated Statements of Operations. These net losses reflect changes in foreign exchange rates on foreign denominated assets and liabilities and are net of losses of $0.3 million and $1.1 million from the related foreign currency forward contracts for the nine months ended September 30, 2015 and 2014, respectively.

The notional amounts and fair values of our derivative instruments recorded in other current assets and other current liabilities in the Condensed Consolidated Balance Sheets were as follows:



	September 30, 2015							December 31, 2014
			Fair Value							Fair Value
(In millions)	Notional Amount		Other Current Assets		Other Current Liabilities			Notional Amount		Other Current Assets		Other Current Liabilities
Cash flow hedges designated as hedging instruments	$	24.0	$	0.1	$	(0.8	)	$	86.7	$	7.3	$	—
Other hedges not receiving hedge accounting	1.1		—		—			23.4		—		—
Total	$	25.1	$	0.1	$	(0.8	)	$	110.1	$	7.3	$	—