The following tables provide information about the fair values of our derivative financial instruments as of the respective balance sheet dates:


	December 31, 2021
	Asset Derivatives
(In thousands)	Balance Sheet Location	Fair Value
Derivatives qualifying as cash flow hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	352
Total derivatives		$	352


	December 31, 2020
	Asset Derivatives
(In thousands)	Balance Sheet Location	Fair Value
Derivatives qualifying as cash flow hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	1,509
Total derivatives		$	1,509

N/A – We define “N/A” as disclosure not being applicable

We have entered into non-deliverable forward foreign currency exchange contracts with reputable banking counterparties to hedge a portion of our forecasted future INR expenses against foreign currency fluctuations between the United States dollar and the INR. These forward contracts cover a percentage of forecasted monthly INR expenses over time. As of December 31, 2021, there were 12 forward contracts outstanding that when entered into were staggered to mature monthly starting in January 2022 and ending in December 2022. In the future, we may enter into additional forward contracts to increase the amount of hedged monthly INR expenses or initiate hedges for monthly periods beyond December 2022. As of December 31, 2021, the notional amount for each of the outstanding forward contracts ranged from 50 to 250 million INR, or the equivalent of $0.7 million to $3.4 million, based on the exchange rate between the United States dollar and the INR in effect as of December 31, 2021. These amounts also approximate the forecasted future INR expenses we target to hedge in any one month in the future. As of December 31, 2021, we estimate that $0.4 million of net unrealized derivative gains included in accumulated other comprehensive income will be reclassified into income within the next 12 months.

The following tables show the impact of derivative instruments designated as cash flow hedges on the consolidated statements of operations and the consolidated statements of comprehensive income (loss):


	Amount of Gain (Loss) Recognized in OCI						Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income
	Year Ended December 31,							Year Ended December 31,
(In thousands)	2021		2020		2019			2021		2020		2019
Foreign exchange contracts	$	473	$	2,139	$	82	Cost of Revenue	$	611	$	249	$	124
							Selling, general and administrative expenses		351		122		83
							Research and development		668		259		137

In June 2013, concurrent with the issuance of the 1.25% Notes, we entered into the 1.25% Call Option with certain of the initial purchasers of the 1.25% Notes (the “Option Counterparties”). Assuming full performance by the Option Counterparties, the 1.25% Call Option was intended to offset cash payments in excess of the principal amount due upon any conversion of the 1.25% Notes. On July 1, 2020, the 1.25% Notes matured and were repaid in full, and the 1.25% Call Option expired.

Aside from the initial payment of a premium to the Option Counterparties of $82.8 million for the 1.25% Call Option, we were not required to make any cash payments to the Option Counterparties under the 1.25% Call Option, and, subject to the terms and conditions thereof, would have been entitled to receive from the Option Counterparties an amount of cash, generally equal to the amount by which the market price per share of our common stock exceeded the strike price of the 1.25% Call Option during the relevant valuation period. The strike price under the 1.25% Call Option was equal to the conversion price of the 1.25% Notes of $17.19 per share of our common stock.

The 1.25% Call Option, which was indexed to our common stock, was a derivative asset that required mark-to-market accounting treatment, due to the cash settlement features, until the 1.25% Call Option settled or expired. The 1.25% Call Option was measured and reported at fair value on a recurring basis within Level 3 of the fair value hierarchy. For further discussion of the inputs used to determine the fair value of the 1.25% Call Option, refer to Note 6, “Fair Value Measurements and Other Investments.”

The 1.25% Call Option did not qualify for hedge accounting treatment. Therefore, the change in fair value of this instrument was recognized immediately in our consolidated statements of operations in Other income (loss), net. Because the terms of the 1.25% Call Option were substantially similar to those of the 1.25% Notes embedded cash conversion option, discussed next, we expected the net effect of those two derivative instruments on our results of operations to be minimal.

The embedded cash conversion option within the 1.25% Notes was required to be separated from the 1.25% Notes and accounted for separately as a derivative liability, with changes in fair value recognized immediately in our consolidated statements of operations in Other income (loss), net until the cash conversion option settled or expired. The cash conversion option expired without ever having required settlement prior to the maturity of the 1.25% Notes. The initial fair value liability of the embedded cash conversion option was $82.8 million, which simultaneously reduced the carrying value of the 1.25% Notes (effectively an original issuance discount). The embedded cash conversion option was measured and reported at fair value on a recurring basis within Level 3 of the fair value hierarchy. For further discussion of the inputs used to determine the fair value of the embedded cash conversion option, refer to Note 6, “Fair Value Measurements and Other Investments.”

The following table shows the net impact of the changes in fair values of the 1.25% Call Option and 1.25% Notes’ embedded cash conversion option in the consolidated statements of operations:


	Year Ended December 31,
(In thousands)	2021		2020			2019
1.25% Call Option	$	0	$	(84	)	$	(9,020	)
1.25% Embedded cash conversion option		0		185			9,789
Net income included in Other income (loss), net	$	0	$	101		$	769