DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIESThe Company uses foreign currency exchange forward contracts (forward contracts) to protect against the impact of changes in the value of forecasted foreign currency cash flows resulting from revenues and operating expenses denominated in currencies other than the U.S. Dollar (USD), primarily the Euro. Certain of these forward contracts are designated as cash flow hedges and have maturities of up to two years. The Company also enters into forward contracts to manage foreign exchange risk related to asset or liability positions denominated in currencies other than USD. Such forward contracts are considered to be economic hedges, are not designated as hedging instruments and have maturities of up to three months. The Company does not use derivative instruments for speculative trading purposes. The Company is exposed to counterparty credit risk on its derivatives. The Company has established and maintains strict counterparty credit guidelines and enters into hedging agreements with financial institutions that are investment grade or better to minimize the Company’s exposure to potential defaults. The Company is not required to pledge collateral under these agreements.

The following table summarizes the aggregate notional amounts for the Company’s derivatives outstanding as of the periods presented.

Forward Contracts	March 31, 2023		December 31, 2022
Derivatives designated as hedging instruments:
Sell	$	781,346	$	808,635
Purchase	$	172,819	$	177,393
Derivatives not designated as hedging instruments:
Sell	$	266,645	$	218,903
Purchase	$	4,317	$	6,785

The fair value carrying amounts of the Company’s derivatives, which are classified as Level 2 within the fair value hierarchy, were as follows:

Balance Sheet Location	March 31, 2023		December 31, 2022
Derivatives designated as hedging instruments:
Asset Derivatives
Other current assets	$	14,329	$	19,464
Other assets	1,149		2,059
Subtotal	$	15,478	$	21,523
Liability Derivatives
Accounts payable and accrued liabilities	$	15,805	$	12,130
Other long-term liabilities	2,144		1,074
Subtotal	$	17,949	$	13,204
Derivatives not designated as hedging instruments:
Asset Derivatives
Other current assets	$	116	$	1,472
Liability Derivatives
Accounts payable and accrued liabilities	$	151	$	471
Total Derivatives Assets	$	15,594	$	22,995
Total Derivatives Liabilities	$	18,100	$	13,675

For additional discussion of fair value measurements, see Note 1 – Business Overview and Significant Accounting Policies to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The following tables summarize the impact of gains and losses from the Company's derivatives on its Condensed Consolidated Statements of Comprehensive Income for the periods presented.

	Three Months Ended March 31,
	2023			2022
Derivatives Designated as Cash Flow Hedging Instruments		Cash Flow Hedging Gains (Losses) Reclassified into Earnings		Cash Flow Hedging Gains (Losses) Reclassified into Earnings
Net product revenues		$	3,470	$	5,572
Operating expenses		$	(456)	$	(1,379)
Derivatives Not Designated as Hedging Instruments		Gains (Losses) Recognized in Earnings		Gains (Losses) Recognized in Earnings
Operating expenses		$	(4,163)	$	1,292

As of March 31, 2023, the Company expects to reclassify unrealized loss of $1.7 million from Accumulated Other Comprehensive Income (AOCI) to earnings as the forecasted revenues and operating expense transactions occur over the next twelve months. For additional discussion of balances in AOCI see Note 7 – Accumulated Other Comprehensive Income.