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, expenses, 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, 2018 or December 31, 2017.

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 gains (losses), 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 and are reported within either ‘Prepaid expenses and other assets’ or ‘Accrued expenses and other liabilities’ in the condensed consolidated balance sheets, were:



	September 30, 2018						December 31, 2017
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
	(in thousands)
Forward foreign currency exchange contracts	$	1,581		$	(987	)	$	1,241		$	(1,647	)
Netting of counterparty contracts	(987		)	987			(1,241		)	1,241
Foreign currency forward contract derivatives	$	594		$	—		$	—		$	(406	)

The notional amounts of outstanding foreign currency forward exchange contracts presented below report the total U.S. Dollar equivalent position and the net contract fair values for each foreign currency position.



	September 30, 2018					December 31, 2017
	Notional		Fair Value			Notional		Fair Value
	(in thousands)
Singapore Dollar	$	36,985	$	(102	)	$	73,455	$	364
Euro	48,865		(90		)	37,718		(122		)
Japanese Yen	40,510		171			30,688		(89		)
South Korean Won	30,974		(29		)	15,888		(134		)
British Pound Sterling	50,406		12			13,233		80
Other currencies	62,452		632			53,698		(505		)
Total	$	270,192	$	594		$	224,680	$	(406	)

Latest maturity date	October 2018					January 2018

Amounts reported in ‘Foreign currency gains (losses), net’ in the condensed consolidated statements of operations include both realized and unrealized gains (losses) from foreign currency transactions and derivative contracts, and were:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(in thousands)
Foreign currency transaction gains (losses)	$	(1,382	)	$	(674	)	$	(894	)	$	1,120
Foreign currency forward exchange contracts gains (losses)	1,615			417			2,481			(939		)
Foreign currency gains (losses), net	$	233		$	(257	)	$	1,587		$	181