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DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES
9 Months Ended
Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIESThe Company uses foreign currency exchange forward contracts (forward contracts) to protect against the impact of changes in the value of forecasted foreign currency cash flows resulting from revenues and operating expenses denominated in currencies other than the U.S. Dollar (USD), primarily the Euro. Certain of these forward contracts are designated as cash flow hedges and have maturities of up to two years. The Company also enters into forward contracts to manage foreign exchange risk related to asset or liability positions denominated in currencies other than USD. Such forward contracts are considered to be economic hedges, are not designated as hedging instruments and have maturities of up to six months. The Company does not use derivative instruments for speculative trading purposes. The Company is exposed to counterparty credit risk on its derivatives. The Company has established and maintains strict counterparty credit guidelines and enters into hedging agreements with financial institutions that are investment grade or better to minimize the Company’s exposure to potential defaults. The Company is not required to pledge collateral under these agreements.
The following table summarizes the aggregate notional amounts for the Company’s derivatives outstanding as of the periods presented.
Forward ContractsSeptember 30,
2023
December 31,
2022
Derivatives designated as hedging instruments:
Sell$988,286 $808,635 
Purchase$180,560 $177,393 
Derivatives not designated as hedging instruments:
Sell$301,825 $218,903 
Purchase$6,517 $6,785 
The fair value carrying amounts of the Company’s derivatives, which are classified as Level 2 within the fair value hierarchy, were as follows:
Balance Sheet LocationSeptember 30,
2023
December 31,
2022
Derivatives designated as hedging instruments:
Asset Derivatives
Other current assets$21,267 $19,464 
Other assets7,620 2,059 
Subtotal$28,887 $21,523 
Liability Derivatives
Accounts payable and accrued liabilities$9,918 $12,130 
Other long-term liabilities3,623 1,074 
Subtotal$13,541 $13,204 
Derivatives not designated as hedging instruments:
Asset Derivatives
Other current assets$5,210 $1,472 
Liability Derivatives
Accounts payable and accrued liabilities$666 $471 
Total Derivatives Assets$34,097 $22,995 
Total Derivatives Liabilities$14,207 $13,675 
For additional discussion of fair value measurements, see Note 1 – Business Overview and Significant Accounting Policies to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The following tables summarize the impact of gains and losses from the Company's derivatives on its Condensed Consolidated Statements of Comprehensive Income for the periods presented.
Three Months Ended September 30,
20232022
Derivatives Designated as Cash Flow Hedging InstrumentsCash Flow Hedging Gains (Losses)
Reclassified into Earnings
Cash Flow Hedging Gains (Losses)
Reclassified into Earnings
Net product revenues$(4,636)$15,280 
Operating expenses$908 $(3,936)
Derivatives Not Designated as Hedging InstrumentsGains (Losses) Recognized in EarningsGains (Losses) Recognized in Earnings
Operating expenses$6,559 $6,572 
Nine Months Ended September 30,
20232022
Derivatives Designated as Cash Flow Hedging InstrumentsCash Flow Hedging Gains (Losses)
Reclassified into Earnings
Cash Flow Hedging Gains (Losses)
Reclassified into Earnings
Net product revenues$(489)$26,779 
Operating expenses$426 $(7,115)
Derivatives Not Designated as Hedging InstrumentsGains (Losses) Recognized in EarningsGains (Losses) Recognized in Earnings
Operating expenses$3,165 $12,812 
As of September 30, 2023, the Company expects to reclassify unrealized gains of $9.6 million from Accumulated Other Comprehensive Income (AOCI) to earnings as the forecasted revenues and operating expense transactions occur over the next twelve months. For additional discussion of balances in AOCI see Note 7Accumulated Other Comprehensive Income.