Derivative Instruments And Hedging Activities

12 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments And Hedging Activities

Derivative Instruments and Hedging Activities

In June 2015, we entered into interest rate swap contracts to fix the interest rate on $187.5 million of our Nordea Q5000 Loan borrowings (Note 6). These swap contracts, which are settled monthly, began in June 2015 and extend through April 2020. Our interest rate swap contracts qualify for cash flow hedge accounting treatment. The amount of ineffectiveness associated with our interest rate swap contracts was immaterial for all periods presented.

In February 2013, we entered into foreign currency exchange contracts to hedge our foreign currency exposure associated with the Grand Canyon II and Grand Canyon III charter payments denominated in Norwegian kroner through July 2019 and February 2020, respectively. Unrealized losses associated with the effective portion of our foreign currency exchange contracts that qualify for hedge accounting treatment are reflected in “Accumulated other comprehensive loss” in the shareholders’ equity section of the accompanying consolidated balance sheets (net of tax). Changes in unrealized losses associated with the foreign currency exchange contracts that are not designated as cash flow hedges are reflected in “Other income (expense), net” in the accompanying consolidated statements of operations. Hedge ineffectiveness also is reflected in “Other income (expense), net” in the accompanying consolidated statements of operations. The amount of ineffectiveness associated with our foreign currency exchange contracts was immaterial for all periods presented.

The following table presents the balance sheet location and fair value of our derivative instruments that were designated as hedging instruments (in thousands): 

	December 31,
	2018			2017
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Asset Derivative Instruments:
Interest rate swaps	Other current assets	$	863	Other current assets	$	311
Interest rate swaps	Other assets, net	201		Other assets, net	655
		$	1,064		$	966
Liability Derivative Instruments:
Foreign exchange contracts	Accrued liabilities	$	5,857	Accrued liabilities	$	7,492
Foreign exchange contracts	Other non-current liabilities	354		Other non-current liabilities	4,975
		$	6,211		$	12,467

The following table presents the balance sheet location and fair value of our derivative instruments that were not designated as hedging instruments (in thousands): 

	December 31,
	2018			2017
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Liability Derivative Instruments:
Foreign exchange contracts	Accrued liabilities	$	3,454	Accrued liabilities	$	3,133
Foreign exchange contracts	Other non-current liabilities	530		Other non-current liabilities	3,175
		$	3,984		$	6,308

The following tables present the impact that derivative instruments designated as hedging instruments had on our accumulated OCI (net of tax) and our consolidated statements of operations (in thousands). We estimate that as of December 31, 2018, $4.0 million of net losses in accumulated OCI associated with our derivative instruments is expected to be reclassified into earnings within the next 12 months.

	Unrealized Gain (Loss) Recognized in OCI
	Year Ended December 31,
	2018			2017		2016
Foreign exchange contracts	$	(1,453	)	$	2,672	$	3,630
Interest rate swaps	606			651		(1,264		)
	$	(847	)	$	3,323	$	2,366

	Location of Gain (Loss) Reclassified from Accumulated OCI into Earnings	Gain (Loss) Reclassified from Accumulated OCI into Earnings
		Year Ended December 31,
		2018			2017			2016
Foreign exchange contracts	Cost of sales	$	(7,709	)	$	(12,300	)	$	(10,827	)
Interest rate swaps	Net interest expense	508			(615		)	(2,024		)
		$	(7,201	)	$	(12,915	)	$	(12,851	)

The following table presents the impact that derivative instruments not designated as hedging instruments had on our consolidated statements of operations (in thousands): 

	Location of Gain (Loss) Recognized in Earnings	Gain (Loss) Recognized in Earnings
		Year Ended December 31,
		2018			2017		2016
Foreign exchange contracts	Other income (expense), net	$	(901	)	$	818	$	1,198
		$	(901	)	$	818	$	1,198