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Derivatives and Hedging Activities
12 Months Ended
Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities
Derivatives and Hedging Activities

The Company uses derivatives to manage selected foreign currency exchange rate risk for its investments in foreign subsidiaries. In general, the types of risks hedged are those relating to the variability of future earnings and cash flows caused by foreign currency exchange rate fluctuations and interest rates. The Company documents its risk management strategy and hedge effectiveness at the inception of and during the term of each hedge.

Net Investment Hedge

As of December 31, 2018, the amount of notional foreign currency exchange rate contracts outstanding was approximately $88.0 million. There is no significant credit risk associated with the potential failure of any counterparty to perform under the terms of any derivative financial instrument.

The net investment hedge is measured at fair value within the accompanying consolidated balance sheet either as an asset or a liability. As of December 31, 2018, the fair value of the derivative instrument was $4.3 million and was recorded in non-current other assets. As of December 31, 2017, the fair value of the derivative instrument was $2.4 million and was recorded in other long-term liabilities.

For the year ended December 31, 2018, the Company recognized a gain of $4.4 million, net of tax of $2.0 million, recorded in comprehensive income (loss). The Company recognized a loss of $3.0 million, net of taxes of $1.8 million, for the year ended December 31, 2017, recorded in comprehensive income (loss) related to the net investment hedge.

The Company also recorded a gain of $0.3 million for the year ended December 31, 2018, in other income (expense), net related to the ineffective portion of the net investment hedge. The Company recorded a loss of $0.2 million for the year ended December 31, 2017, in other income (expense), net related to the ineffective portion of the net investment hedge.

Embedded Derivative

On August 15, 2018, the Company redeemed its Notes at a price equal to 104.125% of the principal amount, plus accrued and unpaid interest.

The Company had the option to prepay its Notes at any time prior to August 15, 2018, at a price equal to 100% of the principal amount, plus an applicable premium and any accrued and unpaid interest.

Included in the Notes was an optional prepayment period through August 15, 2018, which allowed using proceeds from an equity offering, which constituted an embedded derivative and was bifurcated from the debt host and accounted for separately. The embedded derivative was recorded at fair value at inception until August 15, 2018, with any changes in fair value from inception recorded in earnings. The fair value of the embedded derivative as of December 31, 2017, was $0, due to a minimal probability of an equity offering occurring where the proceeds were used to pay down the Notes prior to the expiration of the optional prepayment time period.

The change in fair value for the years ended December 31, 2018 and December 31, 2017 was $0 and $13.2 million, respectively, and was included in the statements of operations in other income, net.