DERIVATIVE FINANCIAL INSTRUMENTS

The Company transacts business in various foreign countries and is therefore exposed to foreign currency exchange rate risk that impacts the reported U.S. Dollar amounts of revenues, expenses, and certain foreign currency monetary assets and liabilities. In order to manage exposure to fluctuations in foreign currency and to reduce the volatility in earnings caused by fluctuations in foreign exchange rates, the Company enters into forward contracts to buy and sell foreign currency. By policy, the Company does not enter into these contracts for trading purposes or speculation.

Counterparty default risk is considered low because the forward contracts that the Company enters into are over-the-counter instruments transacted with highly-rated financial institutions. The Company was not required to and did not post collateral as of December 31, 2018 or 2017.

The Company’s derivative instruments are recorded at fair value as a derivative asset or liability in the consolidated balance sheets. The Company reports derivative instruments with the same counterparty on a net basis when a master netting arrangement is in place. Changes in fair value are recognized within ‘Foreign currency gains (losses), net’ in the consolidated statements of operations. For the consolidated statements of cash flows, the Company classifies cash flows from derivative instruments at settlement in the same category as the cash flows from the related hedged items within ‘Cash provided by operating activities.’

Results of Derivative Activities

The fair values of derivative assets and liabilities, net, all of which are classified as Level 2, reported within ‘Accrued expenses and other liabilities’ in the consolidated balance sheets were:



	December 31, 2018						December 31, 2017
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
	(in thousands)
Forward foreign currency exchange contracts	$	943		$	(2,256	)	$	1,241		$	(1,647	)
Netting of counterparty contracts	(943		)	943			(1,241		)	1,241
Foreign currency forward contract derivatives	$	—		$	(1,313	)	$	—		$	(406	)

The notional amounts of outstanding forward foreign currency exchange contracts shown below report the total U.S. Dollar equivalent position and the net contract fair values for each foreign currency position.



	December 31, 2018					December 31, 2017
	Notional		Fair Value			Notional		Fair Value
	(in thousands)
Euro	$	34,959	$	(92	)	$	37,718	$	(122	)
Singapore Dollar	34,584		254			73,455		364
Japanese Yen	25,561		(178		)	30,688		(89		)
British Pound Sterling	22,185		183			13,233		80
South Korean Won	9,408		63			15,888		(134		)
Other currencies	67,885		(1,543		)	53,698		(505		)
Total	$	194,582	$	(1,313	)	$	224,680	$	(406	)

Latest maturity date	January 2019					January 2018

Amounts reported in ‘Foreign currency gains (losses), net’ in the consolidated statements of operations include both realized and unrealized gains (losses) from foreign currency transactions and derivative contracts and were as follows:



	Year Ended December 31,
	2018		2017			2016
	(in thousands)
Foreign currency transaction gains	$	552	$	2,284		$	10,814
Foreign currency forward exchange contracts gains (losses)	766		(1,721		)	(13,268		)
Foreign currency gains (losses), net	$	1,318	$	563		$	(2,454	)