Annual report pursuant to Section 13 and 15(d)

Derivative Contracts

v2.4.1.9
Derivative Contracts
12 Months Ended
Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Contracts
Derivative Contracts
The following table summarizes the fair values and the presentation of our derivative financial instruments in the Consolidated Balance Sheets:
(In thousands)
Balance Sheet Component
 
December 31,
2014
 
December 31,
2013
Derivative financial instruments:
 
 
 
 
 
Pharmsynthez Note Receivable and Purchase Option
Prepaid expenses and other current assets
 
$

 
$
6,151

Common stock options/warrants
Investments, net
 
$
6,314

 
$
5,988

Embedded conversion option
2033 Senior Notes, net of discount and estimated fair value of embedded derivatives
 
$
65,947

 
$
101,087

Forward contracts (1)
Current portion of lines of credit and notes payable
 
$
36

 
$
49

(1) 
Gains on forward contracts are recorded in Prepaid expenses and other current assets. Losses on forward contracts are recorded in Accrued expenses.
We enter into foreign currency forward exchange contracts to cover the risk of exposure to exchange rate differences arising from inventory purchases on letters of credit. Under these forward contracts, for any rate above or below the fixed rate, we receive or pay the difference between the spot rate and the fixed rate for the given amount at the settlement date.
To qualify the derivative instrument as a hedge, we are required to meet strict hedge effectiveness and contemporaneous documentation requirements at the initiation of the hedge and assess the hedge effectiveness on an ongoing basis over the life of the hedge. At December 31, 2014 and 2013, our derivative financial instruments do not meet the documentation requirements to be designated as hedges. Accordingly, we recognize the changes in Fair value of derivative instruments, net in our Consolidated Statements of Operations. The following table summarizes the losses and gains recorded for the years ended December 31, 2014 and 2013:
 
For the years ended December 31,
(In thousands)
2014
 
2013
 
2012
Derivative gain (loss):
 
 
 
 
 
Common stock options/warrants (1)
$
1,193

 
$
6,544

 
$
1,350

2033 Senior Notes
(12,213
)
 
(52,742
)
 

Forward contracts
$
388

 
$
256

 
$
(132
)
Total
$
(10,632
)
 
$
(45,942
)
 
$
1,218


(1) 
Includes the Pharmsynthez Note Receivable and the Purchase Option.

The outstanding forward contracts at December 31, 2014 and 2013, have been recorded at fair value and their maturity details are as follows:
(In thousands)
Days until maturity
 
Contract value
 
Fair value at
 December 31, 2014
 
Effect on income (loss)
0 to 30
 
$
750

 
$
780

 
$
30

31 to 60
 
90

 
93

 
3

61 to 90
 

 

 

91 to 120
 
68

 
71

 
3

121 to 180
 

 

 

Total
 
$
908

 
$
944

 
$
36

(In thousands)
Days until maturity
 
Contract value
 
Fair value at
 December 31, 2013
 
Effect on income (loss)
0 to 30
 
$
472

 
$
489

 
$
17

31 to 60
 
561

 
579

 
18

61 to 90
 
503

 
517

 
14

91 to 120
 

 

 

121 to 180
 

 

 

More than 180
 

 

 

Total
 
$
1,536

 
$
1,585

 
$
49