XML 30 R15.htm IDEA: XBRL DOCUMENT
v3.20.1

Derivatives | 3 Months Ended
--- | ---
Mar. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Derivatives Hedging Objectives-We are exposed to certain risks relating to ongoing business operations. The primary risks managed by using derivative instruments are foreign currency exchange rate risk and interest rate risk. Forward contracts on various foreign currencies are entered into to manage the foreign currency exchange rate risk on operational expenditures' exposure denominated in foreign currencies. Interest rate swaps are entered into to manage interest rate risk associated with our floating-rate borrowings. In accordance with authoritative guidance on accounting for derivatives and hedging, we designate foreign currency forward contracts as cash flow hedges on operational exposure and interest rate swaps as cash flow hedges of floating-rate borrowings. Cash Flow Hedging Strategy-To protect against the reduction in value of forecasted foreign currency cash flows, we hedge portions of our revenues and expenses denominated in foreign currencies with forward contracts. For example, when the dollar strengthens significantly against the foreign currencies, the decline in present value of future foreign currency expense is offset by losses in the fair value of the forward contracts designated as hedges. Conversely, when the dollar weakens, the increase in the present value of future foreign currency expense is offset by gains in the fair value of the forward contracts. We enter into interest rate swap agreements to manage interest rate risk exposure. The interest rate swap agreements modify our exposure to interest rate risk by converting floating-rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense and net earnings. These agreements involve the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the agreements without an exchange of the underlying principal amount. For derivative instruments that are designated and qualify as cash flow hedges, the effective portions and ineffective portions of the gain or loss on the derivative instruments, and the hedge components excluded from the assessment of effectiveness, are reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. Derivatives not designated as hedging instruments are carried at fair value with changes in fair value reflected in Other, net in the consolidated statement of operations. Forward Contracts—In order to hedge our operational expenditures' exposure to foreign currency movements, we are a party to certain foreign currency forward contracts that extend until December 2020. We have designated these instruments as cash flow hedges. No hedging ineffectiveness was recorded in earnings relating to the forward contracts during the three months ended March 31, 2020 and 2019. As of March 31, 2020, we estimate that $9 million in losses will be reclassified from other comprehensive (loss) income to earnings over the next 12 months. As of March 31, 2020 and December 31, 2019, we had the following unsettled purchased foreign currency forward contracts that were entered into to hedge our operational exposure to foreign currency movements (in thousands, except for average contract rates):
Outstanding Notional Amounts as of March 31, 2020 |  |  |  |  |  |  |  |
Buy Currency |  | Sell Currency |  | Foreign Amount |  | USD Amount |  | Average Contract Rate
Polish Zloty |  | US Dollar |  | 186,000 |  |  | 48,267 |  |  | 0.2595 |
Indian Rupee |  | US Dollar |  | 3,000,000 |  |  | 41,318 |  |  | 0.0137 |
Singapore Dollar |  | US Dollar |  | 45,000 |  |  | 33,120 |  |  | 0.7360 |
British Pound Sterling |  | US Dollar |  | 13,200 |  |  | 17,197 |  |  | 1.3028 |
Australian Dollar |  | US Dollar |  | 10,950 |  |  | 7,597 |  |  | 0.6938 |
Swedish Krona |  | US Dollar |  | 24,500 |  |  | 2,646 |  |  | 0.1062 |
Outstanding Notional Amounts as of December 31, 2019 |  |  |  |  |  |  |  |
Buy Currency |  | Sell Currency |  | Foreign Amount |  | USD Amount |  | Average Contract Rate
Polish Zloty |  | US Dollar |  | 265,000 |  |  | 68,971 |  |  | 0.2603 |
Indian Rupee |  | US Dollar |  | 4,485,000 |  |  | 61,708 |  |  | 0.0138 |
Singapore Dollar |  | US Dollar |  | 63,500 |  |  | 46,759 |  |  | 0.7364 |
British Pound Sterling |  | US Dollar |  | 18,400 |  |  | 24,109 |  |  | 1.3103 |
Australian Dollar |  | US Dollar |  | 16,500 |  |  | 11,521 |  |  | 0.6982 |
Swedish Krona |  | US Dollar |  | 38,100 |  |  | 4,106 |  |  | 0.1075 |
Interest Rate Swap Contracts—Interest rate swaps outstanding during the three months ended March 31, 2020 and 2019 are as follows:
Notional Amount |  | Interest Rate Received |  | Interest Rate Paid |  | Effective Date |  | Maturity Date
Designated as Hedging Instrument |  |  |  |  |  |  |  |
$1,350 million |  | 1 month LIBOR(1) |  | 2.27% |  | December 31, 2018 |  | December 31, 2019
$1,200 million |  | 1 month LIBOR(1) |  | 2.19% |  | December 31, 2019 |  | December 31, 2020
$600 million |  | 1 month LIBOR(1) |  | 2.81% |  | December 31, 2020 |  | December 31, 2021
______________________ (1)Subject to a 0% floor. In connection with the 2017 Term Facility Amendment, we entered into forward starting interest rate swaps effective March 31, 2017 to hedge the interest payments associated with $750 million of the floating-rate 2017 Term Loan B. The total notional amount outstanding of $750 million became effective December 31, 2018 and extended through the full year 2019. In September 2017, we entered into forward starting interest rate swaps to hedge the interest payments associated with $750 million of the floating-rate Term Loan B. The total notional outstanding of $750 million became effective December 31, 2019 and extends through the full year 2020. In April 2018, we entered into forward starting interest rate swaps to hedge the interest payments associated with $600 million, $300 million and $450 million of the floating-rate Term Loan B related to years 2019, 2020 and 2021, respectively. In December 2018, we entered into forward starting interest rate swaps to hedge the interest payments associated with $150 million of the floating-rate Term Loan B for the years 2020 and 2021. We have designated these swaps as cash flow hedges. The estimated fair values of our derivatives designated as hedging instruments as of March 31, 2020 and December 31, 2019 are as follows (in thousands):
|  | Derivative Assets (Liabilities) |  |  |  |
|  |  |  | Fair Value as of |  |
Derivatives Designated as Hedging Instruments |  | Consolidated Balance Sheet Location |  | March 31, 2020 |  | December 31, 2019
Foreign exchange contracts |  | Other accrued liabilities |  | $ | (8,988) |  |  | $ | — |
Foreign exchange contracts |  | Prepaid expenses and other current assets |  | — |  |  | 1,953 |
Interest rate swaps |  | Other accrued liabilities |  | (20,202) |  |  | (7,020) |
Interest rate swaps |  | Other noncurrent liabilities |  | (9,988) |  |  | (7,918) |
|  |  |  | $ | (39,178) |  |  | $ | (12,985) |
The effects of derivative instruments, net of taxes, on OCI for the three months ended March 31, 2020 and 2019 are as follows (in thousands):
|  | Amount of (Loss) Gain Recognized in OCI on Derivative, Effective Portion |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended March 31, |  |  |  |  |  |  |  |  |  |
Derivatives in Cash Flow Hedging Relationships |  | 2020 |  | 2019 |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | (9,459) |  |  | $ | (255) |  |  |  |  |  |  |  |  |
Interest rate swaps |  | (14,359) |  |  | (5,154) |  |  |  |  |  |  |  |  |
Total |  | $ | (23,818) |  |  | $ | (5,409) |  |  |  |  |  |  |  |  |
|  |  |  | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion |  |  |  |  |  |  |  |  |  |
Derivatives in Cash Flow Hedging Relationships |  | Income Statement Location |  | Three Months Ended March 31, |  |  |  |  |  |  |  |  |  |
|  |  |  | 2020 |  | 2019 |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Cost of revenue |  | $ | 621 |  |  | $ | 2,722 |  |  |  |  |  |  |  |  |
Interest rate swaps |  | Interest expense, net |  | 1,214 |  |  | (520) |  |  |  |  |  |  |  |  |
Total |  |  |  | $ | 1,835 |  |  | $ | 2,202 |  |  |  |  |  |  |  |  |

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration