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Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments

8. Derivative Financial Instruments

The Company’s Korean subsidiary from time to time has entered into 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.

The Company did not have any derivative contracts in effect as of December 31, 2014.

The forward and zero cost collar contracts qualify as cash flow hedges under 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, 2014 and 2013 are as follows:

 

Derivatives designated as hedging instruments:

           December 31,  
          2014      2013  

Asset Derivatives:

         

Zero cost collars

      Other current assets       $ —        $ 4,912   

Offsetting of derivative assets as of December 31, 2013 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   

 

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, 2014 and 2013:

 

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)		  
     2014     2013           2014      2013          2014     2013  

Forward

    $ —        $ 3,405       Net sales    $ —       $ 3,484      Other income (expenses)—
Others		    $ —      $ 412   

Zero cost collars

      (69 )      4,092       Net sales      6,033         (500 )    Other income (expenses)—
Others		      (12 )      222   
  

 

 

    

 

 

        

 

 

     

 

 

       

 

 

    

 

 

  

Total

    $ (69 )    $ 7,497          $ 6,033       $ 2,984         $ (12 )    $ 634   
  

 

 

    

 

 

        

 

 

     

 

 

       

 

 

    

 

 

  

As of December 31, 2014, the amount expected to be reclassified from accumulated other comprehensive income into earnings within the next twelve months is $485 thousand.

On September 1, 2014, the Company and the counterparty, the Goldman Sachs International bank (“GS”), mutually agreed to terminate a zero cost collar contract under termination provisions of the International Swaps and Derivatives Association (“ISDA”) agreement. In connection with this termination, the Company received $1,050 thousand for settlement proceeds from GS.

On September 30, 2014, the Company and the counterparty, UBS AG, Seoul Branch (“UBS”), mutually agreed to terminate a zero cost collar contract under termination provisions of the ISDA agreement. In connection with this termination, the Company received $430 thousand for settlement proceeds from UBS.