Hedging

In 2013, the Company initiated a hedging program intended to mitigate the effect of changes in exchange rates for a portion of the Company’s forecasted product revenues denominated in certain foreign currencies. The program includes foreign currency forward contracts that are designated as cash flow hedges under GAAP having contractual durations from one to twelve months. To date, the existence of operational sites in markets outside the United States has generally minimized the degree to which the Company seeks to hedge its revenues in certain foreign currencies.

The Company formally documents the relationship between foreign currency forward contracts (hedging instruments) and forecasted product revenues (hedged items), as well as the Company’s risk management objective and strategy for undertaking various hedging activities, which includes matching all foreign currency forward contracts that are designated as cash flow hedges to forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the foreign currency forward contracts are highly effective in offsetting changes in cash flows of hedged items on a prospective and retrospective basis. If the Company determines that (i) a foreign currency forward contract is not highly effective as a cash flow hedge, (ii) it has ceased to be a highly effective hedge or (iii) a forecasted transaction is no longer probable of occurring, the Company would discontinue hedge accounting treatment prospectively. The Company measures effectiveness based on the change in fair value of the forward contracts and the fair value of the hypothetical foreign currency forward contracts with terms that match the critical terms of the risk being hedged. As of December 31, 2014, all hedges were determined to be highly effective and the Company has not recorded any ineffectiveness related to the hedging program.

The following table summarizes the notional amount of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges:



	As of December 31, 2014		As of December 31, 2013
Foreign Currency	(in thousands)
Euro	$	20,209	$	17,468
British pound sterling	13,515		—
Total foreign currency forward contracts	$	33,724	$	17,468

The following table summarizes the fair value of the Company’s outstanding foreign currency forward contracts included on the Company’s consolidated balance sheets:



	As of December 31, 2014		As of December 31, 2013
	(in thousands)
Fair value - assets	$	2,011	$	—
Fair value - liabilities	—		(23		)
Net carrying value	$	2,011	$	(23	)