XML 23 R13.htm IDEA: XBRL DOCUMENT v3.7.0.1
Derivative Financial Instruments
6 Months Ended
Jun. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
DERIVATIVE FINANCIAL INSTRUMENTS
 
The Company transacts business in various foreign countries and is therefore exposed to foreign currency exchange rate risk that impacts the reported U.S. Dollar amounts of revenues, costs, and certain foreign currency monetary assets and liabilities. In order to manage exposure to fluctuations in foreign currency and to reduce the volatility in earnings caused by fluctuations in foreign exchange rates, the Company enters into forward contracts to buy and sell foreign currency. By policy, the Company does not enter into these contracts for trading purposes or speculation.

Counterparty default risk is considered low because the forward contracts that the Company enters into are over-the-counter instruments transacted with highly-rated financial institutions. The Company was not required to and did not post collateral as of June 30, 2017 or December 31, 2016.
The Company's derivative instruments are recorded at fair value as a derivative asset or liability in the condensed consolidated balance sheets. The Company reports derivative instruments with the same counterparty on a net basis when a master netting arrangement is in place. Changes in fair value are recognized within 'Foreign currency gain (loss), net' in the condensed consolidated statements of operations. For the cash flow statement, the Company classifies cash flows from derivative instruments at settlement in the same category as the cash flows from the related hedged items within 'Cash used in operating activities'.
Results of Derivative Activities
The fair values of derivative assets and liabilities, net, which are reported within either ‘Prepaid expenses and other assets’ or 'Accrued expenses and other liabilities' in the condensed consolidated balance sheets were:
 
June 30, 2017
 
December 31, 2016
 
Derivative Assets
 
Derivative Liabilities
 
Derivative Assets
 
Derivative Liabilities
 
(in thousands)
Forward foreign exchange contracts
 
 
 
 
 
 
 
  Level 1
$

 
$

 
$

 
$

  Level 2
4,350

 
(1,597
)
 
6,541

 
(6,698
)
  Level 3

 

 

 

 
4,350

 
(1,597
)
 
6,541

 
(6,698
)
Netting of counterparty contracts
(1,597
)
 
1,597

 
(6,541
)
 
6,541

  Foreign currency forward contract derivatives
$
2,753

 
$

 
$

 
$
(157
)


The notional amounts of outstanding foreign currency forward exchange contracts shown below report the total U.S. Dollar equivalent position and the net contract fair values for each foreign currency position.
 
June 30, 2017
 
December 31, 2016
 
Notional
 
Fair Value
 
Notional
 
Fair Value
 
(in thousands)
Japanese Yen
$
64,840

 
$
1,722

 
$
87,171

 
$
4,180

Euro
53,732

 
611

 
94,763

 
(2,611
)
Singapore Dollar
33,618

 
427

 
71,228

 
(1,441
)
South Korean Won
16,243

 
38

 
14,332

 
(660
)
British Pound Sterling
8,833

 
(4
)
 
8,278

 
407

Other currencies
62,418

 
(41
)
 
52,449

 
(32
)
Total
$
239,684

 
$
2,753

 
$
328,221

 
$
(157
)
 
 
 
 
 
 
 
 
Latest maturity date
July 2017

 
 
 
January 2017

 
 

Amounts reported in 'Foreign currency gain (loss), net' in the condensed consolidated statements of operations include both realized and unrealized gains (losses) from foreign currency transactions and derivative contracts, and were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(in thousands)
Foreign currency transaction gain (loss)
$
(1,417
)
 
$
6,503

 
$
1,794

 
$
8,765

Foreign currency forward exchange contracts gain (loss)
1,579

 
(8,203
)
 
(1,356
)
 
(11,712
)
Foreign currency transaction gain (loss), net
$
162

 
$
(1,700
)
 
$
438

 
$
(2,947
)