DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 9—DERIVATIVE FINANCIAL INSTRUMENTS

We enter into derivative financial instruments primarily to hedge certain firm purchase commitments and forecasted transactions denominated in foreign currencies. We record these contracts at fair value on our Consolidated Balance Sheets. Depending on the hedge designation at the inception of the contract, the related gains and losses on these contracts are either: (1) deferred as a component of AOCI until the hedged item is recognized in earnings; (2) offset against the change in fair value of the hedged firm commitment through earnings; or (3) recognized immediately in earnings. At inception and on an ongoing basis, we assess the hedging relationship to determine its effectiveness in offsetting changes in cash flows or fair value attributable to the hedged risk. We exclude from our assessment of effectiveness the portion of the fair value of the forward contracts attributable to the difference between spot exchange rates and forward exchange rates. The ineffective portion of a derivative’s change in fair value and any portion excluded from the assessment of effectiveness are immediately recognized in earnings. Gains and losses on derivative financial instruments that are immediately recognized in earnings are included as a component of gain (loss) on foreign currency-net in the accompanying Consolidated Statements of Operations.

As of June 30, 2015, the majority of our foreign currency forward contracts were designated as cash flow hedging instruments. In addition, we deferred approximately $72.1 million of net losses on these derivative financial instruments in AOCI, and we expect to reclassify approximately $55.3 million of deferred losses out of AOCI by June 30, 2016, as hedged items are recognized. The notional value of our outstanding derivative contracts totaled $661 million at June 30, 2015, with maturities extending through 2017. Of this amount, approximately $417.6 million is associated with various foreign currency expenditures we expect to incur on one of our ASA segment EPCI projects. These instruments consist of contracts to purchase or sell foreign-denominated currencies. As of June 30, 2015, the fair value of these contracts was in a net liability position totaling $45.5 million. The fair value of outstanding derivative instruments is determined using observable financial market inputs, such as quoted market prices, and is classified as Level 2 in nature within the fair value hierarchy.

The following tables summarize our derivative financial instruments:

Asset and Liability Derivatives

	June 30, 2015		December 31, 2014
	(in thousands)
Derivatives Designated as Hedges:
Location:
Other current assets	$	1,332	$	1,173
Other assets		127		16
Total asset derivatives	$	1,459	$	1,189
Accrued Liabilities	$	40,064	$	32,431
Other liabilities		6,848		15,670
Total liability derivatives	$	46,912	$	48,101

The Effects of Derivative Instruments on our Financial Statements

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015			2014
	(in thousands)
Derivatives Designated as Hedges:
Amount of gain (loss) recognized in other comprehensive income (loss)	$	8,034	$	441	$	(28,656	)	$	12,799
Income reclassified from AOCI into income (loss): effective portion
Location: Cost of operations		19,572		293		39,426			495
Gain (loss) recognized in income (loss): ineffective portion and amount excluded from effectiveness testing
Location : Gain (loss) on foreign currency—net		2,047		3,381		3,864			4,228