Foreign Currency Derivative Instruments

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [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 foreign currencies. The change in fair value of these forward contracts represents a natural hedge as gains and losses on these instruments partially offset the changes in the fair value of the underlying monetary assets and liabilities due to movements in currency exchange rates. These forward contracts generally expire in one month. These contracts are considered economic hedges but 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 each period in the consolidated statement of operations.

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

	Three Months Ended
	March 31,
	2015			2014
Cost of revenue	$	(50	)	$	5
Selling, general and administrative	814			61
Total gain	$	764		$	66

The net 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
	March 31,
	2015			2014
Cost of revenue	$	133		$	2
Selling, general and administrative	(1,224		)	(356		)
Total loss	$	(1,091	)	$	(354	)

As of March 31, 2015, the total notional amount of foreign currency forward contracts not designated as hedges was $14.2 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):

	March 31, 2015			December 31, 2014
Gross amounts of recognized assets (liabilities)	$	(443	)	$	(1,993	)
Gross amounts offset in the condensed consolidated balance sheets	114			350
Net amount of recognized asset (liability) presented in the condensed consolidated balance sheets	$	(329	)	$	(1,643	)

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 4 – Fair Value Measurements.