Hedging

The Company maintains a hedging program intended to mitigate the effect of changes in foreign exchange rates for a portion of the Company’s forecasted product revenues denominated in certain foreign currencies. The program includes foreign currency forward contracts that are designated as cash flow hedges under GAAP having contractual durations from one to eighteen months.

The Company formally documents the relationship between foreign currency forward contracts (hedging instruments) and forecasted product revenues (hedged items), as well as the Company's risk management objective and strategy for undertaking various hedging activities, which includes matching all foreign currency forward contracts that are designated as cash flow hedges to forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the foreign currency forward contracts are highly effective in offsetting changes in cash flows of hedged items on a prospective and retrospective basis. If the Company determines that a (i) foreign currency forward contract is not highly effective as a cash flow hedge, (ii) foreign currency forward contract has ceased to be a highly effective hedge or (iii) forecasted transaction is no longer probable of occurring, the Company would discontinue hedge accounting treatment prospectively. The Company measures effectiveness based on the change in fair value of the forward contracts and the fair value of the hypothetical foreign currency forward contracts with terms that match the critical terms of the risk being hedged. As of June 30, 2016, all hedges were determined to be highly effective and the Company had not recorded any ineffectiveness related to the hedging program.

The following table summarizes the notional amount of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges:



	As of June 30, 2016		As of December 31, 2015
Foreign Currency	(in thousands)
Euro	$	193,542	$	103,362
British pound sterling	79,845		78,756
Australian dollar	28,318		27,167
Total foreign currency forward contracts	$	301,705	$	209,285

The following table summarizes the fair value of the Company's outstanding foreign currency forward contracts designated as cash flow hedges under GAAP included on the Company's condensed consolidated balance sheets:



As of June 30, 2016
Assets			Liabilities
Classification	Fair Value		Classification	Fair Value
(in thousands)
Prepaid and other current assets	$	9,966	Other liabilities, current portion	$	(7,317	)
Other assets	1,604		Other liabilities, excluding current portion	(88		)
Total assets	$	11,570	Total liabilities	$	(7,405	)



As of December 31, 2015
Assets			Liabilities
Classification	Fair Value		Classification	Fair Value
(in thousands)
Prepaid and other current assets	$	5,161	Other liabilities, current portion	$	(769	)
Other assets	605		Other liabilities, excluding current portion	(132		)
Total assets	$	5,766	Total liabilities	$	(901	)

The following table summarizes the potential effect of offsetting derivatives by type of financial instrument on the Company's condensed consolidated balance sheets:



	As of June 30, 2016
	Gross Amounts Recognized			Gross Amounts Offset		Gross Amounts Presented			Gross Amounts Not Offset			Legal Offset
Foreign currency forward contracts	(in thousands)
Total assets	$	11,570		$	—	$	11,570		$	(7,405	)	$	4,165
Total liabilities	$	(7,405	)	$	—	$	(7,405	)	$	7,405		$	—



	As of December 31, 2015
	Gross Amounts Recognized			Gross Amounts Offset		Gross Amounts Presented			Gross Amounts Not Offset			Legal Offset
Foreign currency forward contracts	(in thousands)
Total assets	$	5,766		$	—	$	5,766		$	(901	)	$	4,865
Total liabilities	$	(901	)	$	—	$	(901	)	$	901		$	—