Foreign Currency Derivative Instruments

9 Months Ended

Sep. 30, 2013

Foreign Currency Derivatives [Abstract]

Foreign Currency Derivative Instruments

Foreign Currency Derivative Instruments

Maxwell uses forward contracts to hedge certain monetary assets and liabilities, primarily receivables and payables, denominated in a foreign currency. The change in fair value of these instruments represents a natural hedge as gains and losses offset the changes in the underlying fair value of the monetary assets and liabilities due to movements in currency exchange rates. These contracts generally expire in one month. These contracts are considered economic hedges and are not designated as hedges under the Derivatives and Hedging Topic of the FASB ASC, therefore, the change in the fair value of the instrument is recognized currently in the consolidated statement of operations.

The net gains and losses on foreign currency forward contracts included in cost of revenue and selling, general and administrative expense are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013			2012
Cost of revenue	$	2	$	1	$	32		$	1
Selling, general and administrative	1,377		174		(2		)	(308		)
Total gain (loss)	$	1,379	$	175	$	30		$	(307	)

The net gains and losses on foreign currency forward contracts were partially offset by net gains and losses on the underlying monetary assets and liabilities. Foreign currency gains and losses on those underlying monetary assets and liabilities included in cost of revenue and selling, general and administrative expense are as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Cost of revenue	$	(3	)	$	(1	)	$	(28	)	$	13
Selling, general and administrative	(1,545		)	(357		)	(503		)	(100		)
Total gain (loss)	$	(1,548	)	$	(358	)	$	(531	)	$	(87	)

As of September 30, 2013, the total notional amount of foreign currency forward contracts not designated as hedges was $33.2 million.

The following table presents gross amounts, amounts offset and net amounts presented in the condensed consolidated balance sheets for the Company's derivative instruments measured at fair value (in thousands):

	September 30, 2013			December 31, 2012
Gross amounts of recognized assets (liabilities)	$	(901	)	$	394
Gross amounts offset in the condensed consolidated balance sheets	76			65
Net amount of recognized asset (liability) presented in the condensed consolidated balance sheets	$	(977	)	$	329

The Company has the legal right to offset these recognized assets and liabilities upon settlement of the derivative instruments. For additional information, refer to Note 5 – Fair Value Measurements.