Derivative Instruments and Hedging Activities

Historically, we have entered into forward contracts to hedge our exposures associated with certain foreign currencies. At the maturity of the forward contracts, we may enter into new forward contracts to hedge movements in the underlying currencies. At the time of settlement, we either pay or receive the net settlement amount from the forward contract and recognize this amount in Other expense (income), net in our Consolidated Statements of Operations as a realized foreign exchange gain or loss. At the end of each month, we mark the outstanding forward contracts to market and record an unrealized foreign exchange gain or loss for the mark-to-market valuation. We have not designated any of the forward contracts we have entered into as hedges. Our policy is to record the fair value of each derivative instrument on a gross basis. As of December 31, 2017, we had outstanding forward contracts to (i) purchase $138,823 United States dollars and sell 176,000 Canadian dollars, (ii) purchase 135,000 Euros and sell $160,757 United States dollars and (iii) purchase $114,390 United States dollars and sell 96,150 Euros to hedge our foreign exchange exposures. As of December 31, 2018, we had outstanding forward contracts to purchase 29,000 Euros and sell $33,374 United States dollars. The following table provides the fair value of our derivative instruments not designated as hedging instruments as of December 31, 2017 and 2018:



Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	December 31, 2017		December 31, 2018
Derivative assets	Prepaid expenses and other	$	1,579	$	93
Derivative liabilities	Accrued expenses	2,329		—

Net cash (receipts) payments included in cash from operating activities related to settlements associated with foreign currency forward contracts for the years ended December 31, 2016, 2017 and 2018, are as follows:



	Year Ended December 31,
	2016		2017			2018
Net (receipts) payments	$	—	$	(9,073	)	$	5,797

(Gains) losses for our derivative instruments for the years ended December 31, 2016, 2017 and 2018 are as follows:



		Amount of (Gain) Loss Recognized in Income on Derivatives
		December 31,
Derivatives Not Designated as Hedging Instruments	Location of Loss (Gain) Recognized in Income on Derivative	2016		2017			2018
Foreign exchange contracts	Other expense (income), net	$	—	$	(8,292	)	$	4,954

We have designated a portion of (i) our Euro denominated borrowings by IMI under our Former Revolving Credit Facility and (ii) our Euro Notes as a hedge of net investment of certain of our Euro denominated subsidiaries. For the years ended December 31, 2016, 2017 and 2018, we designated on average 29,649, 103,682 and 224,424 Euros, respectively, of our Euro denominated borrowings by IMI under our Former Revolving Credit Facility and Euro Notes as a hedge of net investment of certain of our Euro denominated subsidiaries. As a result, we recorded the following foreign exchange gains (losses) related to the change in fair value of such debt due to the currency translation adjustments, which is a component of accumulated other comprehensive items, net:



	Year Ended December 31,
	2016		2017			2018
Foreign exchange gains (losses)	$	1,107	$	(15,015	)	$	11,070

As of December 31, 2018, cumulative net gains of $14,258, net of tax, are recorded in accumulated other comprehensive items, net associated with this net investment hedge.

In March 2018, we entered into interest rate swap agreements to limit our exposure to changes in interest rates on a portion of our floating rate indebtedness. As of December 31, 2018, we have $350,000 in notional value of interest rate swap agreements outstanding, which expire in March 2022. Under the interest rate swap agreements, we receive variable rate interest payments associated with the notional amount of each interest rate swap, based upon one-month LIBOR, in exchange for the payment of fixed interest rate payments (at the fixed rate interest specified in the interest rate swap agreements). We have designated these interest rate swaps as cash flow hedges. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. The fair value of the interest rate swaps are estimated using industry standard valuation models using market-based observable inputs, including interest rate curves (Level 2, as described in Note 2.s.). At December 31, 2018, we had a derivative liability of $973, which was recorded as a component of Other Long-term Liabilities in our Consolidated Balance Sheet, which represents the fair value of our interest rate swap agreements.

We have recorded the change in fair value of the interest rate swap agreements to accumulated other comprehensive income. We have recorded unrealized losses of $973 for the year ended December 31, 2018 associated with our interest rate swap agreements. At December 31, 2018, we have recorded cumulative unrealized losses of $973 within accumulated other comprehensive items, net associated with these agreements.