Derivatives and Hedging Activities

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

DERIVATIVES AND HEDGING ACTIVITIES

Our risk management and foreign currency derivatives and hedging policy specifies the conditions under which we may enter into derivative contracts. See Note 1 for additional information on our purpose for entering into derivatives and our overall risk management strategies. We enter into foreign exchange forward and swap contracts to hedge our cash flow risks associated with transactions denominated in currencies other than the local currency of the operation engaging in the transaction. All designated foreign exchange hedging instruments are highly effective.

In 2013 we elected to designate and apply hedge accounting to certain forward exchange contracts. Foreign exchange contracts designated as hedging instruments had notional values of $21.0 million and $125.9 million at December 31, 2015 and 2014, respectively. Foreign exchange contracts not designated as hedging instruments had notional values of $376.3 million and $421.1 million at December 31, 2015 and 2014, respectively. At December 31, 2015, the length of foreign exchange contracts currently in place ranged from 6 days to 25 months.

Also as part of our risk management program, we enter into interest rate swap agreements to hedge exposure to floating interest rates on certain portions of our debt. At December 31, 2015 we had no notional amounts of outstanding interest rate swaps with third parties, compared to $ $40.0 million as of December 31, 2014.

We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments. We perform credit evaluations of our counterparties under forward exchange contracts and interest rate swap agreements and expect all counterparties to meet their obligations. We have not experienced credit losses from our counterparties.

The fair value of foreign exchange derivative contracts not designated as hedging instruments are summarized below:

	Year Ended December 31,
	2015		2014
	(Amounts in thousands)
Current derivative assets	$	2,364	$	11,709
Noncurrent derivative assets	—		6
Current derivative liabilities	3,196		6,168
Noncurrent derivative liabilities	441		348

The fair value of interest rate swaps and foreign exchange derivative contracts designated as hedging instruments are summarized below:

	Year Ended December 31,
	2015		2014
	(Amounts in thousands)
Current derivative assets	$	26	$	—
Current derivative liabilities	1,448		6,952
Noncurrent derivative liabilities	—		411

Current and noncurrent derivative assets are reported in our consolidated balance sheets in prepaid expenses and other and other assets, net, respectively. Current and noncurrent derivative liabilities are reported in our consolidated balance sheets in accrued liabilities and retirement obligations and other liabilities, respectively.

The impact of net changes in the fair values of foreign exchange contracts are summarized below:

	Year Ended December 31,
	2015		2014		2013
	(Amounts in thousands)
Gain (loss) recognized in income	$	23,900	$	8,464	$	(4,352	)

Gains and losses recognized in our consolidated statements of income for foreign exchange contracts are classified as other (expense) income, net.

The impact of net changes in the fair values of interest rate swaps in cash flow hedging relationships are immaterial for disclosure purposes.

In March 2015, we designated €255.7 million of our €500.0 million 2022 EUR Senior Notes discussed in Note 10 as a net investment hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency. We used the spot method to measure the effectiveness of our net investment hedge. Under this method, for each reporting period, the change in the carrying value of the 2022 EUR Senior Notes due to remeasurement of the effective portion is reported in accumulated other comprehensive loss on our consolidated balance sheet and the remaining change in the carrying value of the ineffective portion, if any, is recognized in other expense, net in our consolidated statements of income. We evaluate the effectiveness of our net investment hedge on a prospective basis at the beginning of each quarter. We did not record any ineffectiveness for the year ended December 31, 2015.