Foreign Currency Hedging

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Foreign Currency Hedging

5. Foreign Currency Hedging

We designate the foreign currency exchange contracts used to hedge our royalty revenues based on underlying Euro-denominated sales as cash flow hedges. Euro forward contracts are presented on a net basis on our Condensed Consolidated Balance Sheets as we have entered into a netting arrangement with the counterparty. As of March 31, 2015, and December 31, 2014, all outstanding Euro forward contracts were classified as cash flow hedges.

In October 2014, we entered into a series of Euro forward contracts covering the quarters in which our licensees' sales occurred through December 2015.

The notional amounts, Euro exchange rates and fair values of our Euro forward contracts designated as cash flow hedges were as follows:

Euro Forward Contracts			March 31, 2015				December 31, 2014
			(In thousands)				(In thousands)
Currency	Settlement Price ($ per Euro)	Type	Notional Amount		Fair Value		Notional Amount		Fair Value
Euro	1.256	Sell Euro	$	—	$	—	$	6,000	$	241
Euro	1.257	Sell Euro	15,750		2,675		15,750		728
Euro	1.259	Sell Euro	16,125		2,975		16,125		752
Euro	1.260	Sell Euro	33,000		6,018		33,000		1,468
Euro	1.270	Sell Euro	—		—		7,000		377
Euro	1.281	Sell Euro	—		—		8,000		503
Total			$	64,875	$	11,668	$	85,875	$	4,069

 The location and fair values of our Euro contracts in our Condensed Consolidated Balance Sheets were as follows:

Cash Flow Hedge	Location	March 31, 2015		December 31, 2014
(In thousands)
Euro contracts	Prepaid and other current assets	$	11,668	$	3,352
Euro contracts	Other assets	$	—	$	717

The effect of our derivative instruments in our Condensed Consolidated Statements of Income and our Condensed Consolidated Statements of Comprehensive Income was as follows:

	Three Months Ended
	March 31,
	2015		2014
(In thousands)
Net gain (loss) recognized in OCI, net of tax (1)	$	5,668	$	67
Gain (loss) reclassified from accumulated OCI into royalty revenue, net of tax (2)	$	669	$	(728	)
Net gain (loss) recognized in interest and other income, net - cash flow hedges (3)	$	—	$	2

 _______________________________

(1) Net change in the fair value of the effective portion of cash flow hedges classified in OCI.

(2) Effective portion classified as royalty revenue.

(3) Ineffectiveness from excess hedge was approximately $0 and ($2) for the three months ended March 31, 2015 and 2014, respectively.