DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2015

DERIVATIVE FINANCIAL INSTRUMENTS [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

4. DERIVATIVE FINANCIAL INSTRUMENTS

The Company held mark-to-market forward contracts designated as foreign currency cash flow hedges with notional amounts of 1.8 billion Japanese yen and 7.0 million euros ($15.0 million and $7.5 million, respectively) as of March 31, 2015 and 2.9 billion Japanese yen and 11.0 million euros ($28.0 million and $15.1 million, respectively) as of March 31, 2014, to hedge forecasted foreign-currency-denominated intercompany transactions.

The contracts held at March 31, 2015 have maturities through April 2016 and accordingly, all unrealized gains and losses on foreign currency cash flow hedges included in accumulated other comprehensive loss will be recognized in current earnings over the next 12 months. The pre-tax net gains on foreign currency cash flow hedges reclassified from accumulated other comprehensive loss to revenue were $1.3 million and $0.4 million, respectively, for the three-month periods ended March 31, 2015 and 2014. The corresponding tax effects of these transactions were recorded in provision for income tax expense. As of March 31, 2015 and December 31, 2014, there were $0.7 million and $1.1 million, respectively, of unrealized gains included in accumulated other comprehensive loss related to foreign currency cash flow hedges. The remaining $62.6 million and $52.6 million as of March 31, 2015 and December 31, 2014, respectively, in accumulated other comprehensive loss are related to cumulative translation adjustments.

During the quarter ended March 31, 2015, the Company identified and recorded an adjustment to correct an out-of-period error related to certain tax effects of a prior period net investment hedge, resulting in a $7.8 million reduction to deferred tax assets and accumulated other comprehensive income, which had no impact on net income. The Company has concluded the effect to be immaterial to both the current quarter and prior period financial statements.