Derivative Financial Instruments

6 Months Ended

Jun. 30, 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.

During the three months ended December 31, 2013, we entered into an economic hedge in the form of Japanese Yen collars to minimize our exposure to changes in foreign currency exchange rates related to a particular receivable. The net fair value of these collars as of December 31, 2013 was approximately $0.9 million. During the three months ended June 30, 2014, the collars were closed and resulted in a realized gain of $0.4 million. As of June 30, 2014, there were no outstanding derivative instruments.

	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						For the six months ended
	Location of realized net gain (loss) and	June 30,						June 30,
(in thousands)	changes in the fair value of derivatives	2014			2013			2014			2013
Foreign currency exchange forwards	Other operating, net	$	6		$	(71	)	$	(89	)	$	157
Foreign currency collar	Other operating, net	(124		)	—			(457		)	—

	For the three months ended				For the six months ended
	2014		2013		2014		2013
Weighted average notional amount of deratives outstanding	$	10,457	$	1,360	$	11,201	$	1,994

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).