Annual report pursuant to Section 13 and 15(d)

Derivative Instruments And Hedging Strategies

v3.8.0.1
Derivative Instruments And Hedging Strategies
12 Months Ended
Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments And Hedging Strategies
9.
DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES
Derivative instruments are classified as either assets or liabilities based on their individual fair values. The fair values of the Company’s derivative instruments as of December 31 were as follows (in thousands):
 
2017
 
2016
 
Derivative
Asset
 
Derivative
Liability
 
Derivative
Asset
 
Derivative
Liability
Exchange option liability on subsidiary convertible senior notes

 

 

 
19,436

Forward currency exchange, option and future contracts(1)

 

 

 
36

 
$

 
$

 
$

 
$
19,472

______________________
(1)
Included in other current liabilities in the accompanying consolidated balance sheets.
Cash Flow Hedges. SeaJon, one of the Company’s 50% or less owned companies, had an interest rate swap agreement designated as a cash flow hedge that matured in April 2017. This interest rate swap called for SeaJon to pay a fixed interest rate of 2.79% on the amortized notional value and receive a variable interest rate based on LIBOR on the amortized notional value. By entering into this interest rate swap agreement, SeaJon converted the variable LIBOR component of certain of its outstanding borrowings to a fixed interest rate.
Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments for the years ended December 31 as follows (in thousands):
 
Derivative gains (losses), net
 
2017
 
2016
 
2015
Exchange option liability on subsidiary convertible senior notes
$
19,436

 
$
(13,826
)
 
$
2,900

Options on equities and equity indices

 

 
(452
)
Forward currency exchange, option and future contracts
291

 
(296
)
 
(519
)
Commodity swap, option and future contracts:
 
 
 
 
 
Exchange traded

 
(9
)
 
(1,493
)
Non-exchange traded

 

 
1,485

 
$
19,727

 
$
(14,131
)
 
$
1,921


The exchange option liability on subsidiary convertible senior notes terminated on June 1, 2017 as a consequence of the Spin-Off.
The Company has held positions in publicly traded equity options that convey the right or obligation to engage in future transactions in the underlying equity security or index. These contracts are typically entered into to mitigate the risk of changes in the market value of marketable security positions that the Company is either about to acquire, has acquired or is about to dispose. As of December 31, 2017, there were no outstanding option contracts.
The Company enters and settles forward currency exchange, option and future contracts with respect to various foreign currencies. These contracts enable the Company to buy currencies in the future at fixed exchange rates, which could offset possible consequences of changes in currency exchange rates with respect to the Company’s business conducted outside of the United States. As of December 31, 2017, there were no outstanding forward currency exchange contracts.
Certain of the Company’s 50% or less owned companies have entered and settled positions in various exchange and non-exchange traded commodity swap, option and future contracts. As of December 31, 2017, there were no outstanding contracts.