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Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2014
Derivative Instruments and Hedges, Assets [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS
We hold derivative financial instruments for the purpose of hedging the risks of certain identifiable and anticipated transactions. The types of risks hedged are those relating to the variability of future earnings and cash flows caused by movements in foreign currency exchange rates and interest rates. We hold the following types of derivative instruments:
Foreign exchange rate forward contracts – The purpose of these instruments is to hedge the risk of changes in future cash flows of anticipated purchase or sale commitments denominated in foreign currencies. At December 31, 2014, we held the following material positions: 
 
Notional Amount
Bought (Sold)
(In millions)
 
 
USD Equivalent
Australian dollar
31.9

 
26.1

British pound
73.3

 
114.1

Canadian dollar
(150.0
)
 
(129.1
)
Euro
151.4

 
183.2

Kuwaiti dinar
(5.9
)
 
(20.1
)
Malaysian ringgit
107.8

 
30.8

Norwegian krone
2,859.0

 
383.6

Singapore dollar
222.3

 
167.7

U.S. dollar
(929.1
)
 
(929.1
)

Foreign exchange rate instruments embedded in purchase and sale contracts – The purpose of these instruments is to match offsetting currency payments and receipts for particular projects, or comply with government restrictions on the currency used to purchase goods in certain countries. At December 31, 2014, our portfolio of these instruments included the following material positions: 
 
Notional Amount
Bought (Sold)
(In millions)
 
 
USD Equivalent
Brazilian real
(105.6
)
 
(39.7
)
Norwegian krone
(77.6
)
 
(10.4
)
U.S. dollar
34.6

 
34.6


The purpose of our foreign currency hedging activities is to manage the volatility associated with anticipated foreign currency purchases and sales created in the normal course of business. Our policy is to hold derivatives only for the purpose of hedging risks and not for trading purposes where the objective is solely to generate profit. Generally, we enter into hedging relationships such that changes in the fair values or cash flows of the transactions being hedged are expected to be offset by corresponding changes in the fair value of the derivatives. For derivative instruments that qualify as a cash flow hedge, the effective portion of the gain or loss of the derivative, which does not include the time value component of a forward currency rate, is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
The following table of all outstanding derivative instruments is based on estimated fair value amounts that have been determined using available market information and commonly accepted valuation methodologies. Refer to Note 16 to these consolidated financial statements for further disclosures related to the fair value measurement process. Accordingly, the estimates presented may not be indicative of the amounts that we would realize in a current market exchange and may not be indicative of the gains or losses we may ultimately incur when these contracts settle or mature. 
 
December 31, 2014
 
December 31, 2013
(In millions)
Assets
 
Liabilities
 
Assets
 
Liabilities
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts:
 
 
 
 
 
 
 
Current – Derivative financial instruments
$
172.1

 
$
207.1

 
$
149.3

 
$
152.5

Long-term – Derivative financial instruments
129.4

 
214.6

 
65.4

 
44.1

Total derivatives designated as hedging instruments
301.5

 
421.7

 
214.7

 
196.6

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts:
 
 
 
 
 
 
 
Current – Derivative financial instruments
25.5

 
23.1

 
16.6

 
18.8

Long-term – Derivative financial instruments
5.5

 
5.6

 
3.1

 
3.0

Total derivatives not designated as hedging instruments
31.0

 
28.7

 
19.7

 
21.8

Total derivatives
$
332.5

 
$
450.4

 
$
234.4

 
$
218.4


We recognized gains of $0.9 million, $0.1 million and $4.4 million on cash flow hedges for the years ended December 31, 2014, 2013 and 2012, respectively, due to hedge ineffectiveness as it was probable that the original forecasted transaction would not occur. Cash flow hedges of forecasted transactions, net of tax, resulted in accumulated other comprehensive loss of $77.3 million and gain of $31.9 million at December 31, 2014 and 2013, respectively. We expect to transfer an approximate $17.3 million loss from accumulated OCI to earnings during the next 12 months when the anticipated transactions actually occur. All anticipated transactions currently being hedged are expected to occur by the end of 2016.
The following tables present the impact of derivative instruments in cash flow hedging relationships and their location within the accompanying consolidated statements of income. 
 
Gain (Loss) Recognized in OCI (Effective Portion)
 
Year Ended December 31,
(In millions)
2014
 
2013
 
2012
Interest rate contracts
$
—

 
$
—

 
$
1.6

Foreign exchange contracts
(137.1
)
 
24.1

 
41.9

Total
$
(137.1
)
 
$
24.1

 
$
43.5


Location of Gain (Loss) Reclassified from Accumulated OCI into Income
Gain (Loss) Reclassified From Accumulated
OCI into Income (Effective Portion)
 
Year Ended December 31,
(In millions)
2014
 
2013
 
2012
Foreign exchange contracts:
 
 
 
 
 
Revenue
$
(36.2
)
 
$
(11.7
)
 
$
6.6

Cost of sales
34.2

 
14.8

 
(1.9
)
Selling, general and administrative expense
(0.2
)
 
—

 
(0.2
)
Total
$
(2.2
)
 
$
3.1

 
$
4.5

Location of Gain (Loss) Recognized in Income
Gain (Loss) Recognized in Income (Ineffective Portion
and Amount Excluded from Effectiveness Testing)
 
Year Ended December 31,
(In millions)
2014
 
2013
 
2012
Foreign exchange contracts:
 
 
 
 
 
Revenue
$
24.7

 
$
2.7

 
$
13.7

Cost of sales
(24.9
)
 
(11.0
)
 
(17.6
)
Total
$
(0.2
)
 
$
(8.3
)
 
$
(3.9
)

Instruments that are not designated as hedging instruments are executed to hedge the effect of exposures in the consolidated balance sheets, and occasionally forward foreign currency contracts or currency options are executed to hedge exposures which do not meet all of the criteria to qualify for hedge accounting.
Location of Gain (Loss) Recognized in Income
Gain (Loss) Recognized in Income on
Derivatives (Instruments  Not Designated
as Hedging Instruments)
 
Year Ended December 31,
(In millions)
2014
 
2013
 
2012
Foreign exchange contracts:
 
 
 
 
 
Revenue
$
(4.0
)
 
$
0.6

 
$
4.9

Cost of sales
0.7

 
(0.2
)
 
(0.2
)
Other income (expense), net
35.4

 
(15.0
)
 
6.4

Total
$
32.1

 
$
(14.6
)
 
$
11.1


Balance Sheet Offsetting—We execute derivative contracts only with counterparties that consent to a master netting agreement which permits net settlement of the gross derivative assets against gross derivative liabilities. Each instrument is accounted for individually and assets and liabilities are not offset. As of December 31, 2014 and 2013, we had no collateralized derivative contracts. The following tables present both gross information and net information of recognized derivative instruments:
 
December 31, 2014
 
December 31, 2013
(In millions)
Gross Amount Recognized
 
Gross Amounts Not Offset Permitted Under Master Netting Agreements
 
Net Amount
 
Gross Amount Recognized
 
Gross Amounts Not Offset Permitted Under Master Netting Agreements
 
Net Amount
Derivative assets
$
332.5

 
$
(321.5
)
 
$
11.0

 
$
234.4

 
$
(198.5
)
 
$
35.9


 
December 31, 2014
 
December 31, 2013
(In millions)
Gross Amount Recognized
 
Gross Amounts Not Offset Permitted Under Master Netting Agreements
 
Net Amount
 
Gross Amount Recognized
 
Gross Amounts Not Offset Permitted Under Master Netting Agreements
 
Net Amount
Derivative liabilities
$
450.4

 
$
(321.5
)
 
$
128.9

 
$
218.4

 
$
(198.5
)
 
$
19.9