Net Investment Hedges. We are exposed to the impact of foreign exchange rate fluctuations on the value of investments in our foreign subsidiaries whose functional currencies are other than the U.S. Dollar. In order to mitigate the impact of foreign currency exchange rates, we have entered into various foreign currency debt obligations, which are designated as hedges against our net investments in foreign subsidiaries. As of March 31, 2021 and December 31, 2020, the total principal amounts of foreign currency debt obligations designated as net investment hedges were $2.2 billion and $1.9 billion, respectively.

We also use cross-currency interest rate swaps to hedge a portion of our net investment in our European operations. As of both March 31, 2021 and December 31, 2020, U.S. Dollar to Euro cross-currency interest rate swap contracts with a total notional amount of $3.3 billion were outstanding, with maturity dates from April 2022 to November 2026. At maturity of each outstanding contract, we will receive U.S. Dollars from and pay Euros to the contract counterparty. During the term of each contract, we receive interest payments in U.S. Dollars and make interest payments in Euros based on a notional amount and fixed interest rates determined at contract inception.

From time to time, we use foreign currency forward contracts to hedge against the effect of foreign exchange rate fluctuations on a portion of our net investment in our foreign subsidiaries. As of both March 31, 2021 and December 31, 2020, the total notional amount of foreign currency forward contracts designated as net investment hedges was $355.6 million.

The effect of net investment hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
		Three Months Ended March 31,
		2021		2020
Foreign currency debt		$	68,740	$	99,102
Cross-currency interest rate swaps (included component) (1)		141,228		14,140
Cross-currency interest rate swaps (excluded component) (2)		(40,529)		31,704
Foreign currency forward contracts (included component) (1)		708		—
Foreign currency forward contracts (excluded component) (3)		28		—
Total		$	170,175	$	144,946

Amount of gain or (loss) recognized in earnings:
	Location of gain or (loss)	Three Months Ended March 31,
		2021		2020
Cross-currency interest rate swaps (excluded component) (2)	Interest expense	$	10,049	$	5,089
Foreign currency forward contracts (excluded component) (3)	Interest expense	164		—
Total		$	10,213	$	5,089

Cash Flow Hedges. We hedge our foreign currency translation exposure for forecasted revenues and expenses in our EMEA region between the U.S. Dollar and the British Pound, Euro, Swedish Krona and Swiss Franc. The foreign currency forward and option contracts that we use to hedge this exposure are designated as cash flow hedges. As of March 31, 2021 and December 31, 2020, the total notional amounts of these foreign exchange contracts were $989.0 million and $912.9 million, respectively.

As of March 31, 2021, our foreign currency cash flow hedge instruments had maturity dates ranging from April 2021 to December 2022 and we recorded a net loss of $18.9 million within accumulated other comprehensive income (loss) relating to these foreign exchange contracts that will be reclassified to revenues and expenses as they mature in the next 12 months. As of December 31, 2020, our foreign currency cash flow hedge instruments had maturity dates ranging from January 2021 to December 2022 and we recorded a net loss of $35.4 million within accumulated other comprehensive income (loss) relating to cash flow hedges that will be reclassified to revenues and expenses as they mature in the next 12 months.

We enter into intercompany hedging instruments ("intercompany derivatives") with our wholly-owned subsidiaries in order to hedge certain forecasted revenues and expenses denominated in currencies other than the U.S. Dollar. Simultaneously, we enter into derivative contracts with unrelated third parties to externally hedge the net exposure created by such intercompany derivatives.

We hedge the interest rate exposure created by anticipated fixed rate debt issuances through the use of treasury locks and swap locks (collectively, interest rate locks), which are designated as cash flow hedges. As of March 31, 2021, the total notional amount of interest rate locks outstanding was $725.0 million. As of December 31, 2020, we had no interest rate locks outstanding. During the three months ended March 31, 2021, we had no settled interest rate locks. When interest rate locks are settled, any gain or loss from the transactions is deferred and included as a component of other comprehensive income (loss) and is amortized to interest expense over the term of the forecasted hedged transaction which is equivalent to the term of the interest rate locks. As of March 31, 2021 and December 31, 2020, we recorded a net loss of $3.6 million and $4.1 million, respectively, within accumulated other comprehensive income (loss) to be reclassified to interest expense in the next 12 months for interest rate locks.

The effect of cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020 was as follows (in thousands):


Amount of gain or (loss) recognized in accumulated other comprehensive income:
		Three Months Ended March 31,
		2021		2020
Foreign currency forward and option contracts (included component) (1)		$	31,374	$	28,025
Foreign currency option contracts (excluded component) (2)		196		1,318
Interest rate locks		5,801		(26,232)
Total		$	37,371	$	3,111

Amount of gain or (loss) reclassified from accumulated other comprehensive income to income:
		Three Months Ended March 31,
	Location of gain or (loss)	2021		2020
Foreign currency forward contracts	Revenues	$	(12,969)	$	21,219
Foreign currency forward contracts	Costs and operating expenses	7,204		(11,000)
Interest rate locks	Interest Expense	(805)		168
Total		$	(6,570)	$	10,387

Amount of gain or (loss) excluded from effectiveness testing included in income:
		Three Months Ended March 31,
	Location of gain or (loss)	2021		2020

Foreign currency option contracts (excluded component) (2)	Revenues	$	(181)	$	(521)
Total		$	(181)	$	(521)

Embedded Derivatives. We are deemed to have foreign currency forward contracts embedded in certain of our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved. These embedded derivatives are separated from their host contracts and carried on our balance sheet at their fair value. The majority of these embedded derivatives arise as a result of our foreign subsidiaries pricing their customer contracts in U.S. Dollars.

Economic Hedges of Embedded Derivatives. We use foreign currency forward contracts to manage the foreign exchange risk associated with our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved ("economic hedges of embedded derivatives"). Foreign currency forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date.

Foreign Currency Forward Contracts. We also use foreign currency forward contracts to manage the foreign exchange risk associated with certain foreign currency-denominated monetary assets and liabilities. As a result of foreign currency fluctuations, the U.S. Dollar equivalent values of our foreign currency-denominated monetary assets and liabilities change. Gains and losses on these contracts are included in other income (expense), on a net basis, along with the foreign currency gains and losses of the related foreign currency-denominated monetary assets and liabilities associated with these foreign currency forward contracts. As of March 31, 2021 and December 31, 2020, the total notional amounts of these foreign currency contracts were $5.9 billion and $3.4 billion, respectively.


Amount of gain or (loss) recognized in earnings:
		Three Months Ended March 31,
	Location of gain or (loss)	2021		2020
Embedded derivatives	Revenues	$	4,495	$	7,451
Economic hedge of embedded derivatives	Revenues	(4,213)		(7,902)
Foreign currency forward contracts	Other income (expense)	56,800		133,824
Total		$	57,082	$	133,373


	March 31, 2021				December 31, 2020
	Assets (1)		Liabilities (2)		Assets (1)		Liabilities (2)
Designated as hedging instruments:
Cash flow hedges
Foreign currency forward and option contracts	$	7,832	$	28,869	$	351	$	52,804
Interest rate locks	4,996		—		—		—
Net investment hedges
Cross-currency interest rate swaps	8,259		100,499		—		192,939
Foreign currency forward contracts	—		22,011		—		17,041
Total designated as hedging	21,087		151,379		351		262,784

Not designated as hedging instruments:
Embedded derivatives	5,324		1,604		3,255		3,858
Economic hedges of embedded derivatives	—		2,223		4,372		12
Foreign currency forward contracts	50,919		9,644		3,721		133,805
Total not designated as hedging	56,243		13,471		11,348		137,675
Total Derivatives	$	77,330	$	164,850	$	11,699	$	400,459

We present our derivative instruments and the accrued interest related to cross-currency interest rate swaps at gross fair values in the condensed consolidated balance sheets. We enter into master netting agreements with our counterparties for transactions other than embedded derivatives to mitigate credit risk exposure to any single counterparty. Master netting agreements allow for individual derivative contracts with a single counterparty to offset in the event of default. For presentation on the condensed consolidated balance sheets, we do not offset fair value amounts recognized for derivative instruments or the accrued interest related to cross-currency interest rate swaps under master netting arrangements. The following table presents information related to these offsetting arrangements as of March 31, 2021 and December 31, 2020 (in thousands):


	Gross Amounts Offset in Consolidated Balance Sheet
	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Net Amounts		Gross Amounts not Offset in the Balance Sheet		Net
March 31, 2021
Derivative assets	$	105,185	$	—	$	105,185	$	(86,858)	$	18,327
Derivative liabilities	181,461		—		181,461		(86,858)		94,603

December 31, 2020
Derivative assets	$	38,447	$	—	$	38,447	$	(35,100)	$	3,347
Derivative liabilities	415,628		—		415,628		(35,100)		380,528