Derivative Instruments

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Foreign Currency Forward Contracts - Hedging Instruments

Due to the global nature of our operations, portions of our revenues and operating expenses are recorded in currencies other than the U.S. dollar. The value of revenues and operating expenses measured in U.S. dollars is therefore subject to changes in foreign currency exchange rates. In order to mitigate these changes we use foreign currency forward contracts to lock in exchange rates associated with a portion of our forecasted international revenues and operating expenses.

Foreign currency forward contracts in effect as of September 30, 2016 and December 31, 2015 had durations of 1 to 15 months and 1 to 18 months, respectively. These contracts have been designated as cash flow hedges, and accordingly, to the extent effective, any unrealized gains or losses on these foreign currency forward contracts are reported in accumulated other comprehensive income (loss) (referred to as AOCI in the tables below). Realized gains and losses for the effective portion of such contracts are recognized in revenue when the sale of product in the currency being hedged is recognized and, beginning in the fourth quarter 2015, in operating expenses when the expense in the currency being hedged is recorded. To the extent ineffective, hedge transaction gains and losses are reported in other income (expense), net.

The notional value of foreign currency forward contracts that were entered into to hedge forecasted revenues and operating expenses is summarized as follows:

	Notional Amount
Foreign Currency: (In millions)	As of September 30, 2016		As of December 31, 2015
Euro	$	980.6	$	945.5
Swiss francs	23.9		80.8
Canadian dollar	20.3		76.7
Total foreign currency forward contracts	$	1,024.8	$	1,103.0

The portion of the fair value of these foreign currency forward contracts that was included in accumulated other comprehensive income (loss) in total equity reflected net losses of $15.0 million and net gains of $1.8 million as of September 30, 2016 and December 31, 2015, respectively. We expect all contracts outstanding as of September 30, 2016 to be settled over the next 15 months and any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to revenue or operating expense. We consider the impact of our and our counterparties’ credit risk on the fair value of the contracts as well as the ability of each party to execute its contractual obligations. As of September 30, 2016 and December 31, 2015, credit risk did not change the fair value of our foreign currency forward contracts.

The following tables summarize the effect of foreign currency forward contracts designated as hedging instruments on our condensed consolidated statements of income:

For the Three Months Ended September 30,
Net Gains/(Losses) Reclassified from AOCI into Operating Income (Effective Portion)						Net Gains/(Losses) Recognized into Net Income (Ineffective Portion)
Location	2016			2015		Location	2016			2015
Revenue	$	(5.2	)	$	43.9	Other income (expense)	$	(0.6	)	$	2.0
Operating expenses	$	(0.2	)	$	—	Other income (expense)	$	—		$	—

For the Nine Months Ended September 30,
Net Gains/(Losses) Reclassified from AOCI into Operating Income (Effective Portion)						Net Gains/(Losses) Recognized into Net Income (Ineffective Portion)
Location	2016			2015		Location	2016			2015
Revenue	$	(0.7	)	$	119.3	Other income (expense)	$	3.4		$	5.4
Operating expenses	$	(0.4	)	$	—	Other income (expense)	$	(0.3	)	$	—

Interest Rate Contracts - Hedging Instruments

We have entered into interest rate swap contracts on certain borrowing transactions to manage our exposure to interest rate changes.

In connection with the issuance of our 2.90% Senior Notes, we entered into interest rate swaps with an aggregate notional amount of $675.0 million, which expire on September 15, 2020. The interest rate swap contracts are designated as hedges of the fair value changes in the 2.90% Senior Notes attributable to changes in interest rates. Since the specific terms and notional amount of the swaps match the debt being hedged, it is assumed to be a highly effective hedge and all changes in the fair value of the swaps are recorded as a component of the 2.90% Senior Notes with no net impact recorded in income. Any net interest payments made or received on the interest rate swap contracts are recognized as a component of interest expense in our condensed consolidated statements of income.

Foreign Currency Forward Contracts - Other Derivatives

We also enter into other foreign currency forward contracts, usually with durations of one month or less, to mitigate the foreign currency risk related to certain balance sheet positions. We have not elected hedge accounting for these transactions.

The aggregate notional amount of these outstanding foreign currency contracts was $668.6 million and $721.0 million as of September 30, 2016 and December 31, 2015, respectively. Net losses of $0.4 million and $16.6 million related to these contracts were recognized as a component of other income (expense), net, for three and nine months ended September 30, 2016, respectively, as compared to net losses of $8.1 million and $4.2 million, respectively, in the prior year comparative periods.

Summary of Derivatives

While certain of our derivatives are subject to netting arrangements with our counterparties, we do not offset derivative assets and liabilities in our condensed consolidated balance sheets.

The following table summarizes the fair value and presentation in our condensed consolidated balance sheets of our outstanding derivatives including those designated as hedging instruments:

		Fair Value
(In millions)	Balance Sheet Location	As of September 30, 2016
Hedging Instruments:
Asset derivatives	Other current assets	$	2.9
	Investments and other assets	$	12.1
Liability derivatives	Accrued expenses and other	$	11.4
	Other long-term liabilities	$	—
Other Derivatives:
Asset derivatives	Other current assets	$	5.3
Liability derivatives	Accrued expenses and other	$	2.6
		Fair Value
(In millions)	Balance Sheet Location	As of December 31, 2015
Hedging Instruments:
Asset derivatives	Other current assets	$	16.6
	Investments and other assets	$	0.3
Liability derivatives	Accrued expenses and other	$	10.2
	Other long-term liabilities	$	2.5
Other Derivatives:
Asset derivatives	Other current assets	$	10.3
Liability derivatives	Accrued expenses and other	$	2.0