The Company uses derivative instruments, including foreign currency exchange forward contracts, interest rate swaps and cross-currency interest rate swaps ("CCIRs"), to manage certain foreign currency and interest rate exposures. Derivative instruments are viewed as risk management tools by the Company and are not used for trading or speculative purposes. All derivative instruments are recorded on the Condensed Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The Company utilizes market data or assumptions that the Company believes market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.

The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs), and (2) an entity’s own assumptions about market participant assumptions based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which give the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs, such as forward rates, interest rates, the Company’s credit risk and counterparties’ credit risks, and which minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the ability to observe those inputs. Foreign currency exchange forward contracts, interest rate swaps and CCIRs are based upon pricing models using market-based inputs (Level 2). Model inputs can be verified and valuation techniques do not involve significant management judgment.



(In thousands)	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
March 31, 2019
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	2,275	$	5,520	$	7,795
Interest rate swaps	Other current assets	736		—		736
Total		$	3,011	$	5,520	$	8,531
Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	121	$	1,426	$	1,547
Interest rate swaps	Other current liabilities	96		—		96
Interest rate swaps	Other liabilities	4,639		—		4,639
Total		$	4,856	$	1,426	$	6,282
December 31, 2018
Asset derivatives (Level 2):
Foreign currency exchange forward contracts	Other current assets	$	2,970	$	589	$	3,559
Interest rate swaps	Other current assets	1,331		—		1,331
Interest rate swaps	Other assets	128		—		$	128
Total		$	4,429	$	589	$	5,018
Liability derivatives (Level 2):
Foreign currency exchange forward contracts	Other current liabilities	$	24	$	2,910	$	2,934
Interest rate swaps	Other liabilities	1,849		—		1,849
Total		$	1,873	$	2,910	$	4,783

All of the Company's derivatives are recorded on the Condensed Consolidated Balance Sheets at gross amounts and not offset. All of the Company's interest rate swaps, CCIRs and certain foreign currency exchange forward contracts are transacted under International Swaps and Derivatives Association ("ISDA") documentation. Each ISDA master agreement permits the net settlement of amounts owed in the event of default. The Company's derivative assets and liabilities subject to enforceable master netting arrangements resulted in a net liability of $1.0 million and $0.1 million at March 31, 2019 and

Derivatives Designated as Hedging Instruments



	Amount Recognized in Other Comprehensive Income (“OCI”) on Derivatives						Location of Amount Reclassified from Accumulated OCI into Income	Amount Reclassified from Accumulated OCI into Income - Effective Portion or Equity
	Three Months Ended							Three Months Ended
	March 31							March 31
(In thousands)	2019			2018				2019			2018
Foreign currency exchange forward contracts	$	(712	)	$	240		Product revenues	$	(32	)	$	(212	)
Foreign currency exchange forward contracts (a)	—			—			Retained earnings	—			(1,520		)
Interest rate swaps	(3,309		)	3,310			Interest expense	(301		)	—
Cross-currency interest rate swaps (b)	(52		)	(93		)	Interest expense	314			271
	(4,073		)	3,457				$	(19	)	$	(1,461	)



	Three Months Ended
	March 31
	2019					2018
(in thousands)	Product Revenues		Interest Expense			Product Revenues		Cost of Products Sold			Interest Expense
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded	$	217,768	$	(9,739	)	$	163,829	$	119,678		$	(9,583	)
Interest rate swaps:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	—		301			—		—			—
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	32		—			212		—			—
Amount excluded from effectiveness testing recognized in earnings based on changes in fair value	78		—			—		(19		)	—
Cross-currency interest rate swaps:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	—		(314		)	—		—			(271		)



	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives for the Three Months Ended March 31(c)
(In thousands)	Location of Gain (Loss) Recognized in Income on Derivatives	2019		2018
Foreign currency exchange forward contracts	Cost of services and products sold	$	2,323	$	(5,466	)

The Company conducts business in multiple currencies and, accordingly, is subject to the inherent risks associated with foreign exchange rate movements. Foreign currency-denominated assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods.

The Company uses derivative instruments to hedge cash flows related to foreign currency fluctuations. Foreign currency exchange forward contracts outstanding are part of a worldwide program to minimize foreign currency exchange operating income and balance sheet exposure by offsetting foreign currency exposures of certain future payments between the Company and various subsidiaries, suppliers or customers. The unsecured contracts are with major financial institutions. The Company may be exposed to credit loss in the event of non-performance by the contract counterparties. The Company evaluates the creditworthiness of the counterparties and does not expect default by them. Foreign currency exchange forward contracts are used to hedge commitments, such as foreign currency debt, firm purchase commitments and foreign currency cash flows for certain export sales transactions.

Changes in the fair value of derivatives used to hedge foreign currency denominated balance sheet items are reported directly in earnings, along with offsetting transaction gains and losses on the items being hedged. Derivatives used to hedge forecasted cash flows associated with foreign currency commitments may be accounted for as cash flow hedges, as deemed appropriate, if the criteria for hedge accounting are met. Gains and losses on derivatives designated as cash flow hedges are deferred in Accumulated other comprehensive loss, a separate component of equity, and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. The ineffective portion of all hedges, if any, is recognized currently in earnings.

The recognized gains and losses offset amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures. At March 31, 2019 and December 31, 2018, the notional amounts of foreign currency exchange forward contracts were $444.3 million and $423.9 million, respectively. These contracts are primarily denominated in British pounds sterling and Euros and mature through October 2021.

In addition to foreign currency exchange forward contracts, the Company designates certain loans as hedges of net investments in international subsidiaries. The Company recorded pre-tax net gains of $4.8 million and $9.5 million for the three months ended March 31, 2019 and March 31, 2018, respectively, in Accumulated other comprehensive loss.

The Company uses interest rate swaps in conjunction with certain debt issuances in order to secure a fixed interest rate. Changes in the fair value attributed to the effect of the swaps’ interest spread and changes in the credit worthiness of the counter-parties are recorded in Accumulated other comprehensive loss.

In January 2017 and February 2018, the Company entered into a series of interest rate swaps that cover the period from 2018 through 2022 and had the effect of converting $300.0 million of the Term Loan Facility from floating-rate to fixed-rate. The fixed rates provided by the swaps replace the adjusted LIBOR rate in the interest calculation, ranging from 2.12% for 2019 to 3.12% for 2022. The total notional of the Company's interest rate swaps was $300.0 million as of March 31, 2019.

The Company may use CCIRs in conjunction with certain debt issuances in order to secure a fixed local currency interest rate. Under these CCIRs, the Company receives interest based on a fixed or floating U.S. dollar rate and pays interest on a fixed local currency rate based on the contractual amounts in dollars and the local currency, respectively. At maturity, there is also the payment of principal amounts between currencies. Changes in the fair value attributed to the effect of the swaps' interest spread and changes in the credit worthiness of the counter-parties are recorded in Accumulated other comprehensive loss. Changes in value attributed to the effect of foreign currency fluctuations are recorded in the Condensed Consolidated Statements of Operations and offset currency fluctuation effects on the debt principal. The Company had no outstanding CCIRs at March 31, 2019.