XML 57 R18.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Derivatives and Hedging Instruments | 12 Months Ended
--- | ---
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Instruments | Derivatives and Hedging Instruments Derivatives Designated as Hedging Instruments 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 both December 31, 2023 and 2022, the total principal amounts of foreign currency debt obligations designated as net investment hedges was $1.5 billion. We also utilize cross-currency interest rate swaps, designated as net investment hedges, which effectively convert a portion of our U.S. dollar-denominated fixed-rate debt to foreign currency-denominated fixed-rate debt, to hedge the currency exposure associated with our net investment in our foreign subsidiaries. As of December 31, 2023 and 2022, the total notional amount of cross-currency interest rate swaps designated as net investment hedges, were $3.1 billion and $3.9 billion respectively, with maturity dates ranging through 2026. From time to time, we use foreign currency forward contracts, which are designated as net investment hedges, to hedge against the effect of foreign exchange rate fluctuations on our net investment in our foreign subsidiaries. As of December 31, 2023 and 2022, the total notional amount of foreign currency forward contracts designated as net investment hedges were $887.5 million and $373.4 million, respectively. Certain of our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved are deemed to have foreign currency forward contracts embedded in them. 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. We use these forward contracts embedded within our customer agreements to hedge against the effect of foreign exchange rate fluctuations on our net investment in our foreign subsidiaries. The effect of net investment hedges on accumulated other comprehensive income and the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands):
Amount of gain or (loss) recognized in accumulated other comprehensive income: |  |
|  |  | Years Ended December 31,
|  |  | 2023 |  | 2022 |  | 2021
Foreign currency debt |  | $ | (54,120) |  |  | $ | 160,286 |  |  | $ | 93,945 |
Foreign currency forward contracts (included component) (1) |  | (9,442) |  |  | 27,323 |  |  | 2,621 |
Foreign currency forward contracts (excluded component) (2) |  | 2,683 |  |  | (2,535) |  |  | (2) |
Cross-currency interest rate swaps (included component) (1) |  | (72,049) |  |  | 276,350 |  |  | 282,935 |
Cross-currency interest rate swaps (excluded component) (3) |  | 1,045 |  |  | (35,723) |  |  | (52,517) |
Total |  | $ | (131,883) |  |  | $ | 425,701 |  |  | $ | 326,982 |
Amount of gain or (loss) recognized in earnings: |  |
| Location of gain or (loss) |  | Years Ended December 31,
|  | 2023 |  | 2022 |  | 2021
Foreign currency forward contracts (excluded component) (2) | Interest expense |  | $ | 1,920 |  |  | $ | (469) |  |  | $ | 242 |
Cross-currency interest rate swaps (excluded component) (3) | Interest expense |  | 45,469 |  |  | 50,188 |  |  | 44,933 |
Total |  |  | $ | 47,389 |  |  | $ | 49,719 |  |  | $ | 45,175 |
(1)Included component represents foreign exchange spot rates. (2)Excluded component represents foreign currency forward points. (3)Excluded component represents cross-currency basis spread and interest rates. Cash Flow Hedges. We hedge our foreign currency transaction exposure for forecasted revenues and expenses in our EMEA region between the U.S. Dollar and foreign currencies, primarily the British Pound and the Euro. The foreign currency forward and option contracts that we use to hedge this exposure are designated as cash flow hedges. As of December 31, 2023 and 2022, the total notional amounts of these foreign exchange contracts were $1.2 billion and $490.8 million, respectively. As of December 31, 2023, our foreign currency cash flow hedge instruments had maturity dates ranging from January 2024 to December 2025 and we had a net loss of $7.2 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses for cash flow hedges that will mature in the next 12 months. As of December 31, 2022, our foreign currency cash flow hedge instruments had maturity dates ranging from January 2023 to February 2024 and we had a net gain of $8.2 million recorded within accumulated other comprehensive income (loss) to be reclassified to revenues and expenses for cash flow hedges that will 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 both December 31, 2023 and 2022, we had no interest rate locks outstanding. 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 December 31, 2023 and 2022, we had a net gain of $1.1 million and $1.4 million, respectively, recorded within accumulated other comprehensive income (loss) to be reclassified to interest expense in the next 12 months for interest rate locks. We also use cross-currency swaps, which are designated as cash flow hedges, to manage the foreign currency exposure associated with a portion of our foreign currency-denominated debt. As of both December 31, 2023 and 2022, the total notional amount of cross-currency interest rate swaps, designated as cash flow hedges, was $280.3 million. The effect of cash flow hedges on accumulated other comprehensive income and the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands):
Amount of gain or (loss) recognized in accumulated other comprehensive income: |  |
|  |  | Years Ended December 31,
|  |  | 2023 |  | 2022 |  | 2021
Foreign currency forward and option contracts (included component) (1) |  | $ | (15,956) |  |  | $ | (8,711) |  |  | $ | 67,767 |
Foreign currency option contracts (excluded component) (2) |  | — |  |  | — |  |  | 151 |
Cross-currency interest rate swaps |  | (2,175) |  |  | (2,386) |  |  | — |
Interest rate locks |  | (4,971) |  |  | 49,392 |  |  | 9,624 |
Total |  | $ | (23,102) |  |  | $ | 38,295 |  |  | $ | 77,542 |
Amount of gain or (loss) reclassified from accumulated other comprehensive income to income:
|  |  | Years Ended December 31,
| Location of gain or (loss) |  | 2023 |  | 2022 |  | 2021
Foreign currency forward contracts | Revenues |  | $ | (9,760) |  |  | $ | 148,100 |  |  | $ | (39,297) |
Foreign currency forward contracts | Costs and operating expenses |  | 15,425 |  |  | (71,968) |  |  | 20,496 |
Interest rate locks | Interest Expense |  | 1,183 |  |  | (26) |  |  | (4,056) |
Total |  |  | $ | 6,848 |  |  | $ | 76,106 |  |  | $ | (22,857) |
(1)Included component represents foreign exchange spot rates. (2)Excluded component represents option's time value. Derivatives Not Designated as Hedging Instruments Embedded Derivatives. As described above, certain of our customer agreements that are priced in currencies different from the functional or local currencies of the parties involved are deemed to have foreign currency forward contracts embedded in them. 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 December 31, 2023 and 2022, the total notional amounts of these foreign currency contracts were $3.1 billion and $3.0 billion, respectively. Cross-currency Interest Rate Swaps. During the year ended December 31, 2023, we elected to de-designate a portion of our cross-currency interest rate swaps previously designated as net investment hedges. Gains and losses subsequent to the de-designation will be recognized in earnings to offset remeasurement gains and losses from foreign currency monetary assets and liabilities. We also entered into $283.4 million of cross-currency interest rate swaps, which were not designated as hedging instruments. As of December 31, 2023, the total notional amount of cross-currency interest rate swaps which were not designated as hedging instruments was $1.1 billion. The following table presents the effect of derivatives not designated as hedging instruments in our consolidated statements of operations (in thousands):
Amount of gain or (loss) recognized in earnings: |  |  |  |  |  |
|  |  | Years Ended December 31,
| Location of gain or (loss) |  | 2023 |  | 2022 |  | 2021
Embedded derivatives (1) | Revenues |  | $ | — |  |  | $ | (568) |  |  | $ | 3,503 |
Economic hedge of embedded derivatives (2) | Revenues |  | — |  |  | (984) |  |  | (5,937) |
Foreign currency forward contracts | Other income (expense) |  | (20,191) |  |  | 137,633 |  |  | 129,496 |
Cross-currency interest rate swaps | Other income (expense) |  | 6,534 |  |  | — |  |  | — |
Total |  |  | $ | (13,657) |  |  | $ | 136,081 |  |  | $ | 127,062 |
(1)Embedded derivatives which are considered foreign currency forward contracts were designated as net investment hedges beginning March 31, 2022. (2)As of December 31, 2023, we had no economic hedge of embedded derivatives outstanding. Fair Value of Derivative Instruments The following table presents the fair value of derivative instruments recognized in our consolidated balance sheets , excluding accrued interest, as of December 31, 2023 and 2022 (in thousands):
| December 31, 2023 |  | December 31, 2022
| Assets (1) |  | Liabilities (2) |  | Assets (1) |  | Liabilities (2)
Designated as hedging instruments: |  |  |  |  |  |  |
Cash flow hedges |  |  |  |  |  |  |
Foreign currency forward and option contracts | $ | 2,493 |  |  | $ | 14,327 |  |  | $ | 27,812 |  |  | $ | 21,352 |
Cross-currency interest rate swaps | 35,950 |  |  | — |  |  | 19,239 |  |  | — |
Net investment hedges |  |  |  |  |  |  |
Foreign currency forward contracts | 2,981 |  |  | 16,668 |  |  | 25,077 |  |  | 4,805 |
Cross-currency interest rate swaps | 131,583 |  |  | — |  |  | 274,234 |  |  | — |
Total designated as hedging | 173,007 |  |  | 30,995 |  |  | 346,362 |  |  | 26,157 |
Not designated as hedging instruments: |  |  |  |  |  |  |
Foreign currency forward contracts | 3,662 |  |  | 70,340 |  |  | 58,230 |  |  | 7,531 |
Cross-currency interest rate swaps | 80,350 |  |  | — |  |  | — |  |  | — |
Total not designated as hedging | 84,012 |  |  | 70,340 |  |  | 58,230 |  |  | 7,531 |
Total Derivatives | $ | 257,019 |  |  | $ | 101,335 |  |  | $ | 404,592 |  |  | $ | 33,688 |
(1)As presented in our consolidated balance sheets within other current assets and other assets. (2)As presented in our consolidated balance sheets within other current liabilities and other liabilities. Offsetting Derivative Assets and Liabilities 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 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, inclusive of accrued interest, as of December 31, 2023 and 2022 (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
December 31, 2023 |  |  |  |  |  |  |  |  |
Derivative assets | $ | 282,316 |  |  | $ | — |  |  | $ | 282,316 |  |  | $ | (56,341) |  |  | $ | 225,975 |
Derivative liabilities | 111,860 |  |  | — |  |  | 111,860 |  |  | (56,341) |  |  | 55,519 |
December 31, 2022 |  |  |  |  |  |  |  |  |
Derivative assets | $ | 424,516 |  |  | $ | — |  |  | $ | 424,516 |  |  | $ | (34,429) |  |  | $ | 390,087 |
Derivative liabilities | 39,234 |  |  | — |  |  | 39,234 |  |  | (34,429) |  |  | 4,805 |

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration