Derivative Financial Instruments

12 Months Ended

Dec. 31, 2019

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

14.          Derivative Financial Instruments

The Company enters into non-designated foreign currency derivatives, primarily comprised of foreign currency forward contracts, for which hedge accounting does not apply. The changes in the fair market value of these non-designated derivatives are included in other income/expense in the Company’s consolidated statements of income. The Company uses non-designated foreign currency derivatives to hedge foreign-currency-denominated intercompany transactions and to partially mitigate the impact of foreign-currency fluctuations. The fair value of the non-designated foreign currency derivatives is based on third-party quotes that management considered when determining the fair value.

As of December 31, 2019, and 2018, the Company did not hold any non-designated derivative contracts.

During the years ended December 31, 2019, 2018 and 2017, the Company had gains (losses) related to derivative instruments not designated as hedging instruments of zero, zero and $(0.5) million, respectively.

The Company designates as cash-flow hedges those foreign currency forward contracts it enters to hedge forecasted intercompany transactions that are subject to foreign currency exposures. Changes in the fair value of these forward contracts designated as cash-flow hedges are recorded as a component of accumulated other comprehensive income (loss) within shareholders’ equity (deficit), and are recognized in the consolidated statement of income during the period which approximates the time the hedged transaction is settled.

As of December 31, 2019, and 2018, the Company held no forward contracts.

During the years ended December 31, 2019, 2018 and 2017, the Company had gains (losses) related to derivative instruments recorded in other comprehensive income (loss) of zero, $(0.2) million and $(0.2) million, respectively.

During the years ended December 31, 2019, 2018 and 2018, the Company had gains (losses) related to foreign currency forward contracts related to intercompany license fees and product sales hedges reclassified from accumulated other comprehensive loss to revenue of zero, $18 thousand and $0.1 million, respectively.

During the years ended December 31, 2019, 2018 and 2018, the Company had gains (losses) related to foreign currency forward contracts related to intercompany selling expense hedges reclassified from accumulated other comprehensive loss to selling expenses of zero, zero and $0.4 million, respectively.

As of December 31, 2019 and 2018, there were no unrealized gains/(losses) included in accumulated other comprehensive loss related to foreign currency cash flow hedges. The remaining $85.3 million and $79.9 million as of December 31, 2019 and 2018, respectively, in accumulated other comprehensive loss are related to cumulative translation adjustments. The Company assesses hedge effectiveness at least quarterly. During the years ended December 31, 2019 and 2018, all hedges were determined to be effective.