DERIVATIVES AND HEDGING ACTIVITIES

6 Months Ended

Jun. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES

DERIVATIVES AND HEDGING ACTIVITIES:

The Company enters into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks, mainly the exposure to changes in the exchange rate of the NIS against the U.S. dollar that are associated with forecasted cash flows and existing assets and liabilities. The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.

Fair Value of Derivative Contracts

The fair value of derivative contracts in the unaudited condensed consolidated balance sheets at June 30, 2019 and December 31, 2018 were as follows:

		Other current assets		Accrued liabilities		Other current assets		Accrued liabilities
		June 30, 2019				December 31, 2018
		(in thousands)
Derivatives designated as hedging instruments
	Currency forward and option contracts	$	706	$	22	$	27	$	2,122
Derivatives not designated as hedging instruments
	Currency forward and option contracts	$	—	$	—	$	69	$	414
Total derivatives		$	706	$	22	$	96	$	2,536

The gross notional amounts of derivative contracts were NIS denominated. The notional amounts of outstanding derivative contracts in U.S. dollars at June 30, 2019 and December 31, 2018 were as follows:

	June 30, 2019		December 31, 2018
	(in thousands)
Derivatives designated as hedging instruments
Currency forward and option contracts	$	56,197	$	92,956
Derivatives not designated as hedging instruments
Currency forward and option contracts	$	—	$	57,844

Effect of Derivatives Designated as Hedging Instruments on Accumulated Other Comprehensive Income

The following table represents the unrealized gains (losses) of derivatives designated as hedging instruments, net of tax effects, that were recorded in accumulated other comprehensive income as of June 30, 2019 and December 31, 2018 and their effect on OCI for the six months ended June 30, 2019:

	(in thousands)
December 31, 2018	$	(1,978	)
Amount of gain recognized in OCI (effective portion)	3,197
Amount of gain reclassified from OCI to income (effective portion)	(417		)
June 30, 2019	$	802

Effect of Derivative Contracts on the Unaudited Condensed Consolidated Statement of Operations

The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the three months ended June 30, 2019 and 2018 was as follows:

	Derivatives designated as hedging instruments					Derivatives not designated as hedging instruments
	Three Months Ended June 30,					Three Months Ended June 30,
	2019		2018			2019		2018
	(in thousands)
Operating income (expenses)	$	455	$	(1,419	)	$	—	$	—
Interest and other, net	$	—	$	—		$	693	$	(1,814	)

The effect of derivative contracts on the unaudited condensed consolidated statements of operations for the six months ended June 30, 2019 and 2018 was as follows:

	Derivatives designated as hedging instruments					Derivatives not designated as hedging instruments
	Six Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
	(in thousands)
Operating income (expenses)	$	417	$	(884	)	$	—	$	—
Interest and other, net	$	—	$	—		$	2,256	$	(2,704	)