Derivative Financial Instruments

12 Months Ended

Dec. 31, 2015

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

10. DERIVATIVE FINANCIAL INSTRUMENTS

Crocs transacts business in various foreign countries and is therefore exposed to foreign currency exchange rate risk inherent in revenues, costs, and monetary assets and liabilities denominated in non-functional currencies. In general, Crocs enters into foreign currency exchange forward contracts and currency swap derivative instruments to selectively protect against volatility in the value of non-functional currency denominated monetary assets and liabilities, and of future cash flows caused by changes in foreign currency exchange rates. As these derivative instruments do not qualify as hedging instruments under the accounting standards for derivatives and hedging, they are recorded at fair value as a derivative asset or liability on the balance sheet with their corresponding change in fair value recognized in ‘Foreign currency transaction loss, net’in the consolidated statements of operations. For purposes of the cash flow statement, Crocs classifies the cash flows from derivative instruments at settlement from undesignated instruments in the same category as the cash flows from the related hedged items, generally within ‘Cash provided by (used in) operating activities’.

The following table summarizes the notional amounts of outstanding foreign currency exchange contracts as of December 31, 2015 and December 31, 2014. The notional amounts of the derivative financial instruments shown below are denominated in their U.S. Dollar equivalents and represent the amount of all contracts of the foreign currency specified. These notional values do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure of the Company’s exposure to the foreign currency exchange risks.

	December 31,
	2015		2014
	(in thousands)
Foreign currency exchange forward contracts by currency:
Japanese Yen	$	98,390	$	44,533
Euro		34,219		134,755
British Pound Sterling		21,859		17,230
South Korean Won		7,981		14,590
Mexican Peso		7,277		13,180
Australian Dollar		6,459		7,913
South African Rand		6,402		4,355
Indian Rupee		5,036		3,356
Canadian Dollar		1,980		3,005
New Taiwan Dollar		1,798		3,229
Swedish Krona		1,655		1,918
Hong Kong Dollar		668		814
Russian Ruble		667		1,838
Singapore Dollar		-		61,887
Chinese Yuan Renminbi		-		5,376
Norwegian Krone		-		917
New Zealand Dollar		-		743
Brazilian Real		-		-
Total notional value, net	$	194,391	$	319,639
Latest maturity date	January 2016		January 2015

The following table presents the amounts affecting the condensed consolidated statements of operations from derivative instruments and exposure from day-to-day business transactions in various foreign currencies for the years ended December 31, 2015, 2014, and 2013:

	Year Ended December 31,
	2015		2014		2013
	(in thousands)
Foreign currency gain (loss)	$	3,980	$	(1,097)	$	(17,680)
Derivatives not designated as hedging instruments:
Foreign currency exchange forwards gain (loss)		(7,312)		(3,788)		13,002
Foreign currency transaction loss, net	$	(3,332)	$	(4,885)	$	(4,678)

The line ‘Foreign currency transaction loss, net’ on the consolidated statements of operations includes both realized and unrealized gains/losses from underlying foreign currency activity and derivative contracts. These gains and losses are reported on a net basis.