Derivatives and Hedging Activities

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

DERIVATIVES AND HEDGING ACTIVITIES

Our risk management and foreign currency derivatives and hedging policy specifies the conditions under which we may enter into derivative contracts. See Note 1 for additional information on our purpose for entering into derivatives and our overall risk management strategies. We enter into foreign exchange forward and swap contracts to hedge our cash flow risks associated with transactions denominated in currencies other than the local currency of the operation engaging in the transaction. All designated foreign exchange hedging instruments are highly effective.

In 2013 we elected to designate and apply hedge accounting to certain forward exchange contracts. Foreign exchange contracts designated as hedging instruments had notional values of $125.9 million and $6.2 million at December 31, 2014 and 2013, respectively. Foreign exchange contracts not designated as hedging instruments had notional values of $421.1 million and $610.7 million at December 31, 2014 and 2013, respectively. At December 31, 2014, the length of foreign exchange contracts currently in place ranged from 5 days to 37 months.

Also as part of our risk management program, we enter into interest rate swap agreements to hedge exposure to floating interest rates on certain portions of our debt. At December 31, 2014 and 2013, we had $40.0 million and $140.0 million, respectively, of notional amount in outstanding designated interest rate swaps with third parties. All interest rate swaps are highly effective. At December 31, 2014, the maximum remaining length of any interest rate swap contract in place was approximately 6 months.

We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments. We perform credit evaluations of our counterparties under forward exchange contracts and interest rate swap agreements and expect all counterparties to meet their obligations. We have not experienced credit losses from our counterparties.

The fair value of foreign exchange derivative contracts not designated as hedging instruments are summarized below:

	Year Ended December 31,
	2014		2013
	(Amounts in thousands)
Current derivative assets	$	11,709	$	5,215
Noncurrent derivative assets	6		729
Current derivative liabilities	6,168		2,207
Noncurrent derivative liabilities	348		113

The fair value of interest rate swaps and foreign exchange derivative contracts designated as hedging instruments are summarized below:

	Year Ended December 31,
	2014		2013
	(Amounts in thousands)
Current derivative assets	$	—	$	146
Current derivative liabilities	6,952		409
Noncurrent derivative liabilities	411		37

Current and noncurrent derivative assets are reported in our consolidated balance sheets in prepaid expenses and other and other assets, net, respectively. Current and noncurrent derivative liabilities are reported in our consolidated balance sheets in accrued liabilities and retirement obligations and other liabilities, respectively.

The impact of net changes in the fair values of foreign exchange contracts are summarized below:

	Year Ended December 31,
	2014		2013			2012
	(Amounts in thousands)
Gain (loss) recognized in income	$	8,464	$	(4,352	)	$	(7,089	)

Gains and losses recognized in our consolidated statements of income for foreign exchange contracts are classified as other income (expense), net.

The impact of net changes in the fair values of interest rate swaps in cash flow hedging relationships are immaterial for disclosure purposes.