9.	Derivative Instruments and Hedging Activities

We use derivative instruments to manage risks related to interest (through December 30, 2016), the Cash Convertible Notes, and, prior to the sale of the TPHS business, foreign currencies. We account for derivatives in accordance with ASC Topic 815, which establishes accounting and reporting standards requiring that certain derivative instruments be recorded on the balance sheet as either an asset or liability measured at fair value. Additionally, changes in the derivative's fair value will be recognized currently in earnings unless specific hedge accounting criteria are met. As permitted under our master netting arrangements, the fair value amounts of our prior interest rate swaps and foreign currency options and/or forward contracts are presented on a net basis by counterparty in the consolidated balance sheets.

Derivative Instruments Designated as Hedging Instruments

Cash Flow Hedges

Derivative instruments that are designated and qualify as cash flow hedges are recorded at estimated fair value in the consolidated balance sheets, with the effective portion of the gains and losses being reported in accumulated other comprehensive income or loss ("accumulated OCI"). We did not maintain any cash flow hedges during the three or nine months ended September 30, 2017. Cash flow hedges for the three and nine months ended September 30, 2016 consisted solely of an interest rate swap agreement, which effectively modified our exposure to interest rate risk by converting a portion of our floating rate debt to a fixed rate obligation, thus reducing the impact of interest rate changes on future interest expense. Under this agreement, which terminated on December 30, 2016, we received a variable rate of interest based on LIBOR (as defined in Note 6), and we paid a fixed rate of interest with an interest rate of 1.480% plus a spread. Gains and losses on this interest rate swap agreement were reclassified to interest expense in the same period during which the hedged transaction affected earnings or the period in which all or a portion of the hedge became ineffective.

The following table shows the effect of our cash flow hedges on the consolidated balance sheets during the three and nine months ended September 30, 2017 and 2016:

(In thousands)	For the Three Months Ended				For the Nine Months Ended
Derivatives in Cash Flow Hedging Relationships	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect	—	$	14		—	$	109
Loss related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect	—	$	(126	)	—	$	(390	)

Gains and losses representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. During the three and nine months ended September 30, 2017 and 2016, there were no gains or losses on cash flow hedges recognized in our consolidated statements of operations resulting from hedge ineffectiveness.

Derivative Instruments Not Designated as Hedging Instruments

Our Cash Conversion Derivative, Cash Convertible Notes Hedges and, prior to July 31, 2016, foreign currency options and/or forward contracts, do not qualify for hedge accounting treatment under U.S. GAAP and are measured at fair value, with gains and losses recognized immediately in the consolidated statements of operations. These derivative instruments not designated as hedging instruments did not have a material impact on our consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016.

The Cash Conversion Derivative is accounted for as a derivative liability and carried at fair value. In order to offset the risk associated with the Cash Conversion Derivative, we entered into Cash Convertible Notes Hedges, which are cash-settled and are intended to reduce our exposure to potential cash payments that we would be required to make if holders elect to convert the Cash Convertible Notes at a time when our stock price exceeds the conversion price. The Cash Convertible Notes Hedges are accounted for as a derivative asset and carried at fair value.

The gains and losses resulting from a change in fair values of the Cash Conversion Derivative and the Cash Convertible Notes Hedges are reported in the consolidated statements of operations.

(In thousands)		For the Three Months Ended						For the Nine Months Ended
		September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016		Statements of Operations Classification
Cash Convertible Notes Hedges:
Net unrealized gain (loss)	$	5,597		$	67,399		$	118,112		$	61,237		Selling, general and administrative expenses
Cash Conversion Derivative:
Net unrealized (loss) gain	$	(5,597	)	$	(67,399	)	$	(118,112	)	$	(61,237	)	Selling, general and administrative expenses

Prior to the sale of the TPHS business, we also entered into foreign currency options and/or forward contracts in order to minimize our earnings exposure to fluctuations in foreign currency exchange rates. Our foreign currency exchange contracts required current period mark-to-market accounting, with any change in fair value being recorded each period in the consolidated statements of operations in selling, general and administrative expenses. We do not execute transactions or hold derivative financial instruments for trading or other purposes.

Financial Instruments

The estimated fair values of derivative instruments at September 30, 2017 and December 31, 2016 were as follows:

(In thousands)	September 30, 2017			December 31, 2016
Assets:
Derivatives not designated as hedging instruments:
Cash convertible notes hedges, current		$	166,473		$	—
Cash convertible notes hedges, long-term			—			48,361
Liabilities:
Derivatives not designated as hedging instruments:
Cash conversion derivative, current		$	166,473		$	—
Cash conversion derivative, long-term			—			48,361

See Note 8 for more information on fair value measurements.