Derivative Financial Instruments

6 Months Ended

Jun. 30, 2015

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

5. Derivative Financial Instruments

The majority of our travel programs take place outside of the United States, and most foreign suppliers require payment in currency other than the U.S. dollar. Accordingly, we are exposed to foreign currency risk relative to changes in foreign currency exchange rates between those currencies and the U.S. dollar for our non-directly delivered programs. We use forward contracts that allow us to acquire foreign currency at a fixed price for a specified point in time to provide a hedge against foreign currency risk. All of our derivatives are cash flow hedges and at June 30, 2015, all contracts qualified for cash flow hedge accounting.

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income or loss and reclassified into earnings in the same period during which the hedged transaction is recognized in earnings; this is primarily during the second and third quarters of the year when our student travel programs occur. Gains or losses representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

At June 30, 2015, the following forward contracts were outstanding (in thousands):

	Notional Amount	Matures
Forward contracts:
Australian dollar	700	July 2015
Euro	1,705	July 2015
British pound	420	July 2015
New Zealand dollar	50	July 2015

The fair value of our forward contracts were as follows (in thousands):

	June 30, 2015
	Derivatives designated as hedging instruments				Total Net
	Assets		Liabilities		Liabilities
Forward contracts	$	2	$	326	$	324

	December 31, 2014
	Derivatives designated as hedging instruments				Total Net
	Assets		Liabilities		Liabilities
Forward contracts	$	14	$	1,359	$	1,345

The net asset and liability derivatives at June 30, 2015 and December 31, 2014 are reported in the consolidated balance sheets as current and long-term foreign currency exchange contracts.