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Risk Management and Derivatives | 9 Months Ended
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Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
RISK MANAGEMENT AND DERIVATIVES | RISK MANAGEMENT AND DERIVATIVES The Company is exposed to global market risks, including the effects of changes in foreign currency and interest rates. The Company uses derivative instruments to manage financial exposures that occur in the normal course of business and does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to forecasted cash flows and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships. The Company's foreign exchange risk management program consists of designated cash flow hedges and undesignated hedges. As of September 30, 2021, the Company has hedge instruments primarily for: •British Pound/U.S. Dollar; •U.S. Dollar/Chinese Renminbi; •Euro/U.S. Dollar; •U.S. Dollar/Canadian Dollar; •U.S. Dollar/Mexican Peso; •U.S. Dollar/Japanese Yen; and •U.S. Dollar/Korean Won currency pairs. All derivatives are recognized on the unaudited condensed consolidated balance sheets at fair value and classified based on the instrument’s maturity date. The following table presents the fair values of derivative instruments within the unaudited condensed consolidated balance sheets. Refer to Note 7 of the unaudited condensed consolidated financial statements for a discussion of the fair value measurements:
(In thousands) |  | Balance Sheet Classification | September 30, 2021 |  | December 31, 2020 |  | September 30, 2020 |  |
Derivatives designated as hedging instruments under ASC 815 |  |  |  |  |  |  |  |
Foreign currency contracts |  | Other current assets | $ | 6,424 |  |  | $ | — |  |  | $ | 5,659 |  |  |  |  |
Foreign currency contracts |  | Other long term assets | 4,377 |  |  | — |  |  | — |  |  |  |  |
Total derivative assets designated as hedging instruments | $ | 10,801 |  |  | $ | — |  |  | $ | 5,659 |  |  |  |  |
Foreign currency contracts |  | Other current liabilities | $ | 7,123 |  |  | $ | 17,601 |  |  | $ | 4,942 |  |  |  |  |
Foreign currency contracts |  | Other long term liabilities | 620 |  |  | 6,469 |  |  | — |  |  |  |  |
Total derivative liabilities designated as hedging instruments | $ | 7,743 |  |  | $ | 24,070 |  |  | $ | 4,942 |  |  |  |  |
Derivatives not designated as hedging instruments under ASC 815 |  |  |  |  |  |  |  |
Foreign currency contracts |  | Other current assets | $ | 4,935 |  |  | $ | 2,384 |  |  | $ | 5,373 |  |  |  |  |
Total derivative assets not designated as hedging instruments | $ | 4,935 |  |  | $ | 2,384 |  |  | $ | 5,373 |  |  |  |  |
Foreign currency contracts |  | Other current liabilities | $ | 2,242 |  |  | $ | 6,464 |  |  | $ | 1,714 |  |  |  |  |
Total derivative liabilities not designated as hedging instruments | $ | 2,242 |  |  | $ | 6,464 |  |  | $ | 1,714 |  |  |  |  |
The following table presents the amounts in the unaudited condensed consolidated statements of operations in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items:
| Three months ended September 30, |  | Nine months ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
(In thousands) | Total | Amount of Gain (Loss) on Cash Flow Hedge Activity |  | Total | Amount of Gain (Loss) on Cash Flow Hedge Activity |  | Total | Amount of Gain (Loss) on Cash Flow Hedge Activity |  | Total | Amount of Gain (Loss) on Cash Flow Hedge Activity
Net revenues | $ | 1,545,532 |  | $ | (1,953) |  |  | $ | 1,433,021 |  | $ | 218 |  |  | $ | 4,154,261 |  | $ | (7,477) |  |  | $3,070,901 | $ | 3,495 |
Cost of goods sold | $ | 757,428 |  | $ | (3,947) |  |  | $ | 746,701 |  | $ | 4,496 |  |  | 2,068,695 |  | (8,586) |  |  | 1,604,428 |  | 7,179 |
Interest income (expense), net | $ | (9,261) |  | $ | (9) |  |  | $ | (14,955) |  | $ | (9) |  |  | (36,705) |  | (27) |  |  | (32,251) |  | (27) |
Other income (expense), net | $ | (29,476) |  | $ | — |  |  | $ | (7,184) |  | $ | 4 |  |  | (75,150) |  | — |  |  | (10,493) |  | 25 |
The following tables present the amounts affecting the unaudited statements of comprehensive income (loss):
(In thousands) | Balance as of June 30, 2021 | Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives | Amount of gain (loss) reclassified from other comprehensive income (loss) into income | Balance as of September 30, 2021
Derivatives designated as cash flow hedges |  |  |
Foreign currency contracts | $ | (20,346) |  | $ | 14,459 |  | $ | (5,900) |  | $ | 13 |
Interest rate swaps | (522) |  | — |  | (9) |  | (513) |
Total designated as cash flow hedges | $ | (20,868) |  | $ | 14,459 |  | $ | (5,909) |  | $ | (500) |
(In thousands) | Balance as of December 31, 2020 | Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives | Amount of gain (loss) reclassified from other comprehensive income (loss) into income | Balance as of September 30, 2021
Derivatives designated as cash flow hedges |  |  |
Foreign currency contracts | $ | (25,908) |  | $ | 9,858 |  | $ | (16,063) |  | $ | 13 |
Interest rate swaps | (541) |  | — |  | (28) |  | $ | (513) |
Total designated as cash flow hedges | $ | (26,449) |  | $ | 9,858 |  | $ | (16,091) |  | $ | (500) |
(In thousands) | Balance as of June 30, 2020 | Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives | Amount of gain (loss) reclassified from other comprehensive income (loss) into income | Balance as of September 30, 2020
Derivatives designated as cash flow hedges |  |  |
Foreign currency contracts | $ | 26,200 |  | $ | (18,432) |  | $ | 4,701 |  | $ | 3,066 |
Interest rate swaps | (559) |  | — |  | (9) |  | (550) |
Total designated as cash flow hedges | $ | 25,641 |  | $ | (18,432) |  | $ | 4,692 |  | $ | 2,516 |
(In thousands) | Balance as of December 31, 2019 | Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives | Amount of gain (loss) reclassified from other comprehensive income (loss) into income | Balance as of September 30, 2020
Derivatives designated as cash flow hedges |  |  |
Foreign currency contracts | $ | (6,005) |  | $ | 19,727 |  | $ | 10,655 |  | $ | 3,066 |
Interest rate swaps | (577) |  | — |  | (27) |  | (550) |
Total designated as cash flow hedges | $ | (6,582) |  | $ | 19,727 |  | $ | 10,628 |  | $ | 2,516 |
The following table presents the amounts in the unaudited condensed consolidated statements of operations in which the effects of undesignated derivative instruments are recorded and the effects of fair value hedge activity on these line items:
| Three months ended September 30, |  | Nine months ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
(In thousands) | Total | Amount of Gain (Loss) on Fair Value Hedge Activity |  | Total | Amount of Gain (Loss) on Fair Value Hedge Activity |  | Total | Amount of Gain (Loss) on Fair Value Hedge Activity |  | Total | Amount of Gain (Loss) on Fair Value Hedge Activity
Other income (expense), net | $ | (29,476) |  | $ | (2,382) |  |  | $ | (7,184) |  | $ | (962) |  |  | $ | (75,150) |  | $ | (3,197) |  |  | $ | (10,493) |  | $ | 1,022 |
Cash Flow Hedges The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to transactions generated by its international subsidiaries in currencies other than their local currencies. These gains and losses are driven by non-functional currency generated revenue, non-functional currency inventory purchases, investments in U.S. Dollar denominated available-for-sale debt securities, and certain other intercompany transactions. The Company enters into foreign currency contracts to reduce the risk associated with the foreign currency exchange rate fluctuations on these transactions. Certain contracts are designated as cash flow hedges. As of September 30, 2021, December 31, 2020, and September 30, 2020, the aggregate notional value of the Company's outstanding cash flow hedges was $739.1 million, $812.5 million, and $301.2 million, respectively, with contract maturities ranging from one to twenty-four months. The Company may enter into long term debt arrangements with various lenders which bear a range of fixed and variable rates of interest. The nature and amount of the Company's long term debt can be expected to vary as a result of future business requirements, market conditions and other factors. The Company may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations. The interest rate swap contracts are accounted for as cash flow hedges. Refer to Note 5 of the unaudited condensed consolidated financial statements for a discussion of long term debt. As of September 30, 2021, December 31, 2020, and September 30, 2020, the Company had no outstanding interest rate swap contracts. For contracts designated as cash flow hedges, the changes in fair value are reported as other comprehensive income (loss) and are recognized in current earnings in the period or periods during which the hedged transaction affects current earnings. Effective hedge results are classified in the unaudited condensed consolidated statements of operations in the same manner as the underlying exposure. Undesignated Derivative Instruments The Company may elect to enter into foreign exchange forward contracts to mitigate the change in fair value of specific assets and liabilities on the unaudited condensed consolidated balance sheets. These undesignated instruments are recorded at fair value as a derivative asset or liability on the unaudited condensed consolidated balance sheets with their corresponding change in fair value recognized in other expense, net, together with the re-measurement gain or loss from the hedged balance sheet position. As of September 30, 2021, December 31, 2020, and September 30, 2020, the total notional value of the Company's outstanding undesignated derivative instruments was $431.1 million, $313.1 million, and $262.9 million, respectively. Credit Risk The Company enters into derivative contracts with major financial institutions with investment grade credit ratings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit risk is generally limited to the unrealized gains in the derivative contracts. However, the Company monitors the credit quality of these financial institutions and considers the risk of counterparty default to be minimal.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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