Derivative Financial Instruments

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

9. Derivative Financial Instruments

The Company’s Korean subsidiary entered into option, forward and zero cost collar contracts to hedge the risk of changes in the functional-currency-equivalent cash flows attributable to currency rate changes on U.S. dollar denominated revenues.

Details of derivative contracts as of December 31, 2013 are as follows:

Date of transaction	Type of derivative	Total notional amount		Month of settlement
January 25, 2013	Zero cost collar	$	54,000	January to March 2014
March 8, 2013	Zero cost collar	$	54,000	April to June 2014
April 5, 2013	Zero cost collar	$	54,000	July to September 2014
May 29, 2013	Zero cost collar	$	54,000	October to December 2014

The option, forward and zero cost collar contracts qualify as cash flow hedges under ASC 815, “Derivatives and Hedging” (“ASC 815”), since at both the inception of the contracts and on an ongoing basis, the hedging relationship was and is expected to be highly effective in achieving offsetting cash flows attributable to the hedged risk during the term of the contracts. The Company is utilizing the “hypothetical derivative” method to measure the effectiveness by comparing the changes in value of the actual derivative versus the change in fair value of the “hypothetical derivative.”

The fair values of the Company’s outstanding forward and zero cost collar contracts recorded as assets as of December 31, 2013, 2012 and 2011 are as follows:

Derivatives designated as hedging instruments:		December 31,
		2013		2012 (As Restated)		2011 (As Restated)
Asset Derivatives:
Zero cost collars	Other current assets	$	4,912	$	1,458	$	—
Liabilities Derivatives:
Forward	Derivative liabilities		—		—		6,801
Zero cost collars	Derivative liabilities		—		944		2,956

Offsetting of derivative assets as of December 31, 2013, 2012 and 2011 is as follows:

As of December 31, 2013	Gross amounts of recognized assets/liabilities		Gross amounts offset in the balance sheets		Net amounts of assets/liabilities presented in the balance sheets		Gross amounts not  offset in the balance sheets					Net amount
							Financial instruments			Cash collateral received/pledged
Asset Derivatives:
Zero cost collars	$	4,912	$	—	$	4,912	$	—		$	—	$	4,912
As of December 31, 2012 (As Restated)	Gross amounts of recognized assets/liabilities		Gross amounts offset in the balance sheets		Net amounts of assets/liabilities presented in the balance sheets		Gross amounts not offset in the balance sheets					Net amount
							Financial instruments			Cash collateral received/pledged
Asset Derivatives:
Zero cost collars	$	1,458	$	—	$	1,458	$	(944	)	$	—	$	514
Liability Derivatives:
Zero cost collars	$	944	$	—	$	944	$	(944	)	$	—	$	—
As of December 31, 2011 (As Restated)	Gross amounts of recognized assets/liabilities		Gross amounts offset in the balance sheets		Net amounts of assets/liabilities presented in the balance sheets		Gross amounts not offset in the balance sheets					Net amount
							Financial instruments			Cash collateral received/pledged
Liability Derivatives:
Forward	$	6,801	$	—	$	6,801	$	—		$	—	$	6,801
Zero cost collars	$	2,956	$	—	$	2,956	$	—		$	—	$	2,956

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (“AOCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative, representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness, are recognized in current earnings.

The following table summarizes the impact of derivative instruments on the consolidated statement of operations for the years ended December 31, 2013, 2012 and 2011:

Derivatives in ASC 815 Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)							Location of Gain (Loss) Reclassified from AOCI into Statement of Operations (Effective Portion)	Amount of Gain (Loss) Reclassified from AOCI into Statement of Operations (Effective Portion)									Location of Gain (Loss) Recognized in Statement of Operations on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Statement of Operations on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2013		2012 (As Restated)		2011 (As Restated)				2013			2012 (As Restated)			2011 (As Restated)				2013		2012 (As Restated)		2011 (As Restated)
Options	$	—	$	—	$	(85	)	Net sales	$	—		$	—		$	(829	)	Other income (expenses)— Others	$	—	$	—	$	(18	)
Forward		3,405		3,416		(3,125	)	Net sales		3,484			(3,192	)		10,708		Other income (expenses)— Others		412		1,300		(215	)
Zero cost collars		4,092		1,821		(2,349	)	Net sales		(500	)		(1,416	)		1,100		Other income (expenses)— Others		222		365		(309	)
Total	$	7,497	$	5,237	$	(5,559	)		$	2,984		$	(4,608	)	$	10,979			$	634	$	1,665	$	(542	)

As of December 31, 2013, the amount expected to be reclassified from accumulated other comprehensive income into earnings within the next twelve months is $4,782 thousand.

The Company’s option, forward and zero cost collar contracts are subject to termination upon the occurrence of the following events:

(i) On the last day of a fiscal quarter, the sum of qualified and unrestricted cash and cash equivalents held by the Company is less than $30 million.

(ii) The rating of the Company’s debt is B- or lower by Standard & Poor’s Ratings Group or any successor rating agency thereof (“S&P”) or B3 or lower by Moody’s Investor Services, Inc. or any successor rating agency thereof (“Moody’s”) or the Company’s debt ceases to be assigned a rating by either S&P or Moody’s. See Note 25, “Subsequent Events” – Early termination of derivative contracts.

In addition, the Company is required to deposit cash collateral with three financial institutions, the counterparties to the forward and zero cost collar contracts, for any exposure in excess of $5 million for each financial institution. No cash collateral was required as of December 31, 2013.