Foreign Exchange Risk Management

6 Months Ended

Jun. 30, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Foreign Exchange Risk Management

13. Foreign Exchange Risk Management

In order to minimize earnings and cash flow volatility resulting from currency exchange rate changes, on occasion we enter into derivative instruments, principally forward and option foreign currency contracts. These contracts are designed to hedge anticipated foreign currency transactions and changes in the value of specific assets, liabilities and probable commitments. We do not enter into currency exchange rate derivative instruments for speculative purposes.  

The free-standing derivative forward contracts are used to offset our exposure to the change in value of specific foreign currency denominated assets and liabilities. These derivatives are not designated as hedges. Changes in the value of these contracts are recognized in earnings, thereby offsetting the current earnings effect of the related change in functional currency value of foreign currency denominated assets and liabilities. The gross notional amount of these contracts outstanding was $107.4 million and $118.6 million at June 30, 2016 and December 31, 2015, respectively. The cash flow settlements from these derivative contracts are primarily reported within investing activities in the condensed consolidated statements of cash flows. 

We recognized $8.2 million and $37.2 million of gains from these forward contracts for the three months ended June 30, 2016 and June 30, 2015, respectively, and $11.0 million and $43.1 million of gains from these forward contracts for the six months ended June 30, 2016 and June 30, 2015, respectively, included within gain on derivatives in the condensed consolidated statements of operations. Additionally, we have foreign exchange transaction losses of $23.3 million and $12.9 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and foreign exchange transaction losses of $14.4 million and $18.3 million for the six months ended June 30, 2016 and June 30, 2015, respectively, which are included within miscellaneous, net in our condensed consolidated statements of operations.