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Derivatives and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The effect of net investment hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
		Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019
Foreign currency debt		$	(130,774)	$	151,825	$	(116,887)	$	181,431
Cross-currency interest rate swaps (included component) (1)		(78,226)		30,505		(74,419)		36,331
Cross-currency interest rate swaps (excluded component) (2)		(16,588)		6,566		13,606		10,117
Foreign currency forward contracts (included component) (1)		(1,485)		—		(1,485)		—
Foreign currency forward contracts (excluded component) (3)		(28)		—		(28)		—
Total		$	(227,101)	$	188,896	$	(179,213)	$	227,879

Amount of gain or (loss) recognized in earnings:
	Location of gain or (loss)	Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019
Cross-currency interest rate swaps (excluded component) (2)	Interest expense	6,613		5,072		17,161		14,163
Foreign currency forward contracts (excluded component) (3)	Interest expense	1		—		1		—
Total		$	6,614	$	5,072	$	17,162	$	14,163

(1)Included component represents foreign exchange spot rates.

(2)Excluded component represents cross-currency basis spread and interest rates.

(3)Excluded component represents foreign currency forward points.

Summary of cash flow hedges

The effect of cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
		Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019
Foreign currency forward and option contracts (included component)(1)		$	(40,770)	$	20,979	$	(35,092)	$	29,345
Foreign currency option contracts (excluded component) (2)		639		(1,518)		2,315		(2,923)
Interest rate locks		(2,420)		—		(29,302)		—
Total		$	(42,551)	$	19,461	$	(62,079)	$	26,422

Amount of gain or (loss) reclassified from accumulated other comprehensive income to income:
		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2020		2019		2020		2019
Foreign currency forward contracts	Revenues	$	2,904	$	27,843	$	44,681	$	56,388
Foreign currency forward contracts	Costs and operating expenses	(1,951)		(14,474)		(23,449)		(29,548)
Interest rate locks	Interest Expense	(731)		—		(473)		—
Total		$	222	$	13,369	$	20,759	$	26,840

Amount of gain or (loss) excluded from effectiveness testing included in income:
		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2020		2019		2020		2019
Foreign currency forward contracts	Other income (expense)	$	—	$	—	$	—	$	88
Foreign currency option contracts (excluded component) (2)	Revenues	(430)		(538)		(1,454)		(555)
Total		$	(430)	$	(538)	$	(1,454)	$	(467)

(1)Included component represents foreign exchange spot rates.

(2)Excluded component represents option's time value.

Schedule of derivatives not designated as hedging instruments in the Company's condensed consolidated statements of operations

The following table presents the effect of derivatives not designated as hedging instruments in the Company's condensed consolidated statements of operations (in thousands):


Amount of gain or (loss) recognized in earnings:
		Three Months Ended September 30,				Nine Months Ended September 30,
	Location of gain or (loss)	2020		2019		2020		2019
Embedded derivatives	Revenues	$	(3,308)	$	2,830	$	1,402	$	3,552
Economic hedge of embedded derivatives	Revenues	3,259		(3,221)		(2,342)		(2,680)
Foreign currency forward contracts	Other income (expense)	(50,022)		77,644		(29,214)		96,143
Total		$	(50,071)	$	77,253	$	(30,154)	$	97,015

Schedule of derivative instruments recognized in the Company's condensed consolidated balance sheets

The following table presents the fair value of derivative instruments recognized in the Company's condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019 (in thousands):


	September 30, 2020				December 31, 2019
	Assets (1)		Liabilities (2)		Assets (1)		Liabilities (2)
Designated as hedging instruments:
Cash flow hedges
Foreign currency forward and option contracts	$	4,919	$	22,792	$	24,853	$	5,898
Interest rate locks	—		3,848		—		—
Net investment hedges
Cross-currency interest rate swaps	18,465		53,026		26,251		—
Foreign currency forward contracts	—		1,512		—		—
Total designated as hedging	23,384		81,178		51,104		5,898

Not designated as hedging instruments:
Embedded derivatives	5,562		1,754		4,595		2,268
Economic hedges of embedded derivatives	691		—		1,367		—
Foreign currency forward contracts	14,257		35,706		641		27,446
Total not designated as hedging	20,510		37,460		6,603		29,714
Total Derivatives	$	43,894	$	118,638	$	57,707	$	35,612

(1)As presented in the Company's condensed consolidated balance sheets within other current assets and other assets.

(2)As presented in the Company's condensed consolidated balance sheets within other current liabilities and other liabilities.

Schedule of offsetting derivative assets and liabilities

The following table presents information related to these offsetting arrangements as of September 30, 2020 and December 31, 2019 (in thousands):


	Gross Amounts Offset in Consolidated Balance Sheet
	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Net Amounts		Gross Amounts not Offset in the Balance Sheet		Net
September 30, 2020
Derivative assets	$	63,037	$	—	$	63,037	$	(56,415)	$	6,622
Derivative liabilities	129,889		—		129,889		(56,415)		73,474

December 31, 2019
Derivative assets	$	76,640	$	—	$	76,640	$	(37,820)	$	38,820
Derivative liabilities	45,832		—		45,832		(37,820)		8,012

Schedule of offsetting derivative assets and liabilities

The following table presents information related to these offsetting arrangements as of September 30, 2020 and December 31, 2019 (in thousands):


	Gross Amounts Offset in Consolidated Balance Sheet
	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Net Amounts		Gross Amounts not Offset in the Balance Sheet		Net
September 30, 2020
Derivative assets	$	63,037	$	—	$	63,037	$	(56,415)	$	6,622
Derivative liabilities	129,889		—		129,889		(56,415)		73,474

December 31, 2019
Derivative assets	$	76,640	$	—	$	76,640	$	(37,820)	$	38,820
Derivative liabilities	45,832		—		45,832		(37,820)		8,012

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

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+ Details