Derivative Instruments And Hedging Activities

12 Months Ended

Dec. 31, 2014

Derivative Instruments And Hedging Activities [Abstract]

Derivative Instruments And Hedging Activities

Note 15 — Derivative Instruments and Hedging Activities

Derivatives designated as hedging instruments are as follows (inthousands): 

	As of December 31, 2014			As of December 31, 2013
	Balance Sheet		Fair	Balance Sheet		Fair
	Location		Value	Location		Value
Asset Derivatives:
Interest rate swaps	Other assets, net	$	369	Other assets, net	$	446
		$	369		$	446
Liability Derivatives:
Foreign exchange contracts	Accrued liabilities	$	12,661	Accrued liabilities	$	1,905
Interest rate swaps	Accrued liabilities		561	Accrued liabilities		746
Foreign exchange contracts	Other non-current liabilities		37,767	Other non-current liabilities		13,166
		$	50,989		$	15,817

Derivatives that were not designated as hedging instruments are as follows (inthousands): 

	As of December 31, 2014			As of December 31, 2013
	Balance Sheet		Fair	Balance Sheet		Fair
	Location		Value	Location		Value
Asset Derivatives:
Foreign exchange contracts	Other current assets	$	-	Other current assets	$	69
		$	-		$	69

As a result of the announcement in December2012 of the sale of ERT, we de-designated all of our then remaining oil and gas derivative contracts as hedging instruments.  In addition, under the terms of our former credit facility (Note6), we were required to use a portion of the proceeds from the sale of ERT as well as from the sale of the Caesar and Express vessels, to make payments to reduce our indebtedness.  Because of the probability that the former term loan debt would be totally repaid before the expiration of our then existing interest rate swaps, we also concluded in December2012 that those swaps no longer qualified as cash flow hedges.  In connection with the de-designation of these derivative contracts as hedging instruments, we were required to recognize amounts previously recorded in Accumulated OCI and related deferred taxes into earnings.  The mark-to-market adjustments related to our oil and gas commodity derivative contracts and interest rate swaps are reflected in “Loss on commodity derivative contracts” and “Other income (expense), net”, respectively, in the accompanying consolidated statements of operations.  In February2013, we settled all of our then remaining commodity derivative contracts and then existing interest rate swap contracts for payments of approximately $22.5 million and $0.6 million, respectively.

In January2013, we entered into foreign currency exchange contracts to hedge through September2017the foreign currency exposure associated with the Grand Canyon charter payments ($104.6 million) denominated in Norwegian kroner (NOK591.3 million).  In February2013, we entered into similar foreign currency exchange contracts to hedge our foreign currency exposure with respect to the Grand Canyon II and Grand Canyon III charter payments ($100.4 million and $98.8 million, respectively) denominated in Norwegian kroner (NOK594.7 million and NOK595.0 million, respectively), through July2019 and February2020, respectively.  These contracts currently qualify for hedge accounting treatment.  All of our remaining foreign exchange contracts that were not accounted for as hedge contracts have been settled.  We had no foreign currency exchange contracts for vessel charters denominated in British pounds as of December 31, 2014.

In September2013, we entered into various interest rate swap contracts to fix the interest rate on $148.1 million of our Term Loan debt (Note6).  These monthly contracts began in October2013 and extend through October2016.  These contracts are accounted for under hedge accounting.

For the year ended December 31, 2014, we recorded losses totaling $1.7 million in “Other income (expense), net” in the accompanying consolidated statement of operations related to ineffectiveness associated with our foreign currency hedges with respect to the Grand Canyon II charter payments.Ineffectiveness associated with our cash flow hedges was immaterial for the years endedDecember 31, 2013 and 2012.The following tables present the impact that derivative instruments designated as cash flow hedges had on our Accumulated OCI(net of tax) and our consolidated statements of operations for the years ended December 31, 2014,  2013  and 2012 (inthousands).  We estimate that as of December 31, 2014,$7.8 million of losses in Accumulated OCI associated with our derivatives is expected to be reclassified into earnings within the next 12 months. 

		Gain (Loss) Recognized in OCI
		on Derivatives, Net of Tax
		(Effective Portion)
		Year Ended December 31,
		2014		2013		2012
Foreign exchange contracts	$	(22,170)	$	(9,796)	$	-
Oil and gas commodity contracts		-		-		(12,860)
Interest rate swaps		70		(195)		(81)
	$	(22,100)	$	(9,991)	$	(12,941)

			Gain (Loss) Reclassified from
	Location of Gain (Loss)		Accumulated OCI into Earnings
	Reclassified from		(Effective Portion)
	Accumulated OCI into Earnings		Year Ended December 31,
	(Effective Portion)		2014		2013		2012
Oil and gas commodity contracts	Income from discontinued operations, net of tax	$	-	$	-	$	3,184
Interest rate swaps	Net interest expense		(858)		(152)		(523)
Foreign exchange contracts	Cost of sales		(2,507)		(1,324)		-
		$	(3,365)	$	(1,476)	$	2,661

The following table presents the impact that derivative instruments not designated as hedges had on our consolidated statement of operations for the years ended December 31, 2014,  2013 and 2012 (inthousands): 

			Gain (Loss) Recognized
	Location of Gain (Loss)		in Earnings on Derivatives
	Recognized in Earnings		Year Ended December 31,
	on Derivatives		2014		2013		2012
Oil and gas commodity contracts	Income from discontinued operations, net of tax	$	-	$	-	$	5,550
Oil and gas commodity contracts	Loss on commodity derivative contracts		-		(14,113)		(10,507)
Interest rate swaps	Other expense, net		-		(86)		(567)
Foreign exchange contracts	Other expense, net		7		(630)		411
		$	7	$	(14,829)	$	(5,113)