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 September 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 condensed consolidated statements of cash flows, 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 provided by operating activities.’

Results of Derivative Activities

The fair values of derivative assets and liabilities, net, all of which are classified as Level 2, are reported within either ‘Prepaid expenses and other assets’ or ‘Accrued expenses and other liabilities’ in the condensed consolidated balance sheets were:



	September 30, 2017						December 31, 2016
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
	(in thousands)
Foreign currency transaction gains (losses)	$	1,118		$	(833	)	$	6,541		$	(6,698	)
Netting of counterparty contracts	(833		)	833			(6,541		)	6,541
Foreign currency forward contract derivatives	$	285		$	—		$	—		$	(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.



	September 30, 2017					December 31, 2016
	Notional		Fair Value			Notional		Fair Value
	(in thousands)
Euro	$	41,271	$	(159	)	$	71,228	$	(1,441	)
Japanese Yen	36,616		(25		)	87,171		4,180
Singapore Dollar	31,689		245			94,763		(2,611		)
South Korean Won	26,380		98			8,278		407
British Pound Sterling	6,195		73			14,332		(660		)
Other currencies	50,218		53			52,449		(32		)
Total	$	192,369	$	285		$	328,221	$	(157	)

Latest maturity date	October 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 September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(in thousands)
Foreign currency transaction gains (losses)	$	(674	)	$	3,039		$	1,120		$	11,804
Foreign currency forward exchange contracts gains
(losses)	417			(1,660		)	(939		)	(13,372		)
Foreign currency gain (loss), net	$	(257	)	$	1,379		$	181		$	(1,568	)