Derivatives and Hedging

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company enters into a limited number of derivative contracts to mitigate the cash flow risk associated with changes in interest rates on variable-rate debt and changes in foreign exchange rates on forecasted foreign currency transactions. The Company accounts for its outstanding derivative contracts in accordance with FASB ASC Topic 815, which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value. The tables below provide information regarding the Company’s outstanding derivative contracts as of the dates indicated (in thousands, except for number of contracts).


September 30, 2021
Derivative Contract Type	Number of Contracts	Notional Amounts		Fair Value Asset (Liability), Net (3)		Balance Sheet Line Item	Unrealized Loss Recorded in AOCL, net of tax
Interest rate swaps (1)	4	$	1,400,000	$	(42,906)	Other liabilities	$	(61,848)
				(27,823)		Accrued liabilities
Foreign currency forwards (2)	27	63,990		(144)		Accrued liabilities	—
Total	31	$	1,463,990	$	(70,873)		$	(61,848)


December 31, 2020
Derivative Contract Type	Number of Contracts	Notional Amounts		Fair Value Asset (Liability), Net (3)		Balance Sheet Line Item	Unrealized Loss Recorded in AOCL, net of tax
Interest rate swaps (1)	4	$	1,400,000	$	(74,289)	Other liabilities	$	(78,104)
				(34,886)		Accrued liabilities
Foreign currency forwards (2)	163	430,063		(1,514)		Accrued liabilities	—
Total	167	$	1,830,063	$	(110,689)		$	(78,104)

(1)As a result of the payment under the then outstanding 2016 Credit Agreement term loan and revolving credit facility, the Company de-designated all of its interest rate swaps effective June 30, 2020. Accordingly, hedge accounting is not applicable, and subsequent changes to fair value of the interest rate swaps are recorded in Other income (expense), net. The amounts previously recorded in Accumulated other comprehensive loss are amortized into Interest expense, net over the terms of the hedged forecasted interest payments. See Note 8 — Debt provides additional information regarding the Company’s interest rate swap contracts.

(2)The Company has foreign exchange transaction risk because it typically enters into transactions in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. The Company enters into short-term foreign currency forward exchange contracts to mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income (expense), net because the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding foreign currency forward exchange contracts at September 30, 2021 matured before October 31, 2021.

(3)See Note 12 — Fair Value Disclosures for the determination of the fair values of these instruments.

At September 30, 2021, all of the Company’s derivative counterparties were investment grade financial institutions. The Company did not have any collateral arrangements with its derivative counterparties and none of the derivative contracts contained credit-risk related contingent features. The table below provides information regarding amounts recognized in the accompanying Condensed Consolidated Statements of Operations for derivative contracts for the periods indicated (in thousands).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Amount recorded in:	2021		2020		2021		2020
Interest expense, net (1)	$	7,380	$	7,165	$	21,695	$	17,679
Other expense (income), net (2)	2,558		179		(11,771)		22,494
Total expense, net	$	9,938	$	7,344	$	9,924	$	40,173

(1)Consists of interest expense from interest rate swap contracts.

(2)Consists of net realized and unrealized gains and losses on foreign currency forward contracts and gains and losses on de-designated interest rate swaps. For the nine months ended September 30, 2020, Other expense (income), net included $10.3 million expense on interest rate swap contracts due to forecasted interest payments no longer being probable as a result of the payment under the then outstanding 2016 Credit Agreement term loan and revolving credit facility on June 30, 2020.