Derivatives and Hedging Activities

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES

Our risk management and foreign currency derivatives and hedging policy specifies the conditions under which we may enter into derivative contracts. See Note 1 for additional information on our purpose for entering into derivatives and our overall risk management strategies. We enter into foreign exchange forward contracts to hedge our cash flow risks associated with transactions denominated in currencies other than the local currency of the operation engaging in the transaction.

Foreign exchange contracts had notional values of $388.1 million and $398.5 million at December 31, 2020 and 2019, respectively. At December 31, 2020, the length of foreign exchange contracts currently in place ranged from 15 days to 20 months.

We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments. We perform credit evaluations of our counterparties under forward exchange contracts and expect all counterparties to meet their obligations. We have not experienced credit losses from our counterparties.

The fair values of foreign exchange contracts are summarized below:


	Year Ended December 31,
	2020		2019
	(Amounts in thousands)
Current derivative assets	$	2,857	$	892
Noncurrent derivative assets	249		15
Current derivative liabilities	682		3,418
Noncurrent derivative liabilities	—		8

Current and noncurrent derivative assets are reported in our consolidated balance sheets in prepaid expenses and other and other assets, net, respectively. Current and noncurrent derivative liabilities are reported in our consolidated balance sheets in accrued liabilities and retirement obligations and other liabilities, respectively.

The impact of net changes in the fair values of foreign exchange contracts are summarized below:


	Year Ended December 31,
	2020		2019		2018
	(Amounts in thousands)
Loss recognized in income	$	(10,294)	$	(6,495)	$	(3,154)

Gains and losses recognized in our consolidated statements of income for foreign exchange contracts are classified as other income (expense), net.

On September 22, 2020, as a means of managing the volatility of foreign currency exposure with the Euro/U.S. dollar exchange rate, we entered into a cross-currency swap ("Swap") associated with our Euro investment in certain of our international subsidiaries and was designated as a net investment hedge. We exclude the interest accruals on the swap from the assessment of hedge effectiveness and recognize the interest accruals in earnings within interest expense. For each reporting period, the change in the fair value of the swap attributable to changes in the spot rate and differences between the change in the fair value of the excluded components and the amounts recognized in earnings under the swap accrual process are reported in accumulated other comprehensive loss on our consolidated balance sheet. As of December 31, 2020, the notional value of the Swap was €163.2 million and has an early termination date of September 2025. The swap is included in retirement obligations and other liabilities in our consolidated balance sheet as of December 31, 2020, with a fair value of $18.1 million and is classified as Level II under the fair value hierarchy. For the period ending December 31, 2020, an interest accrual of $(0.6) million was recognized as other income (expense), net, in our consolidated statements of income.

The cumulative net investment hedge loss, net of deferred taxes, under cross-currency swap recorded in accumulated other comprehensive loss ("AOCL") on our consolidated balance sheet are summarized below:


	Year Ended December 31,
	2020		2019		2018
	(Amounts in thousands)
Loss recognized in AOCL	$	(13,836)	$	—	$	—

In March 2015, we designated €255.7 million of our 1.25% EUR Senior Notes due 2022 ("2022 Euro Senior Notes") discussed in Note 13 as a net investment hedge of our Euro investment in certain of our international subsidiaries. On September 22, 2020, we increased the designated hedged value on the 2022 Euro Senior Notes to €336.3 million, which reflects the remaining balance of the 2022 Euro Senior Notes following the closing of the previously announced tender offer for the 2022 Euro Senior Notes on the same date. For each reporting period, the change in the carrying value due to the remeasurement of the effective portion is reported in accumulated other comprehensive loss on our consolidated balance sheet and the remaining change in the carrying value of the ineffective portion, if any, is recognized in other income (expense), net in our consolidated statement of income.

The cumulative impact recorded in AOCL on our consolidated balance sheet from the change in carrying value due to the remeasurement of the effective portion of the net investment hedge are summarized below:


	Year Ended December 31,
	2020	2019	2018
	(Amounts in thousands)
Loss recorded in AOCL	(34,973)	(12,084)	(17,164)

We use the spot method to measure the effectiveness of both of the net investment hedges and evaluate the effectiveness on a prospective basis at the beginning of each quarter. We did not record any ineffectiveness for the years ended December 31, 2020, 2019 or 2018.