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Hedging
 9 Months Ended
Sep. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Hedging Hedging
Foreign currency forward contracts - Designated as hedging instruments
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 U.S. GAAP having contractual durations from one to eighteen months. The Company recognizes realized gains and losses for the effective portion of such contracts in “Product revenues, net” in its condensed consolidated statements of operations in the same period that it recognizes the product revenues that were impacted by the hedged foreign exchange rate changes.
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 were to determine 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 September 30, 2020, all hedges were determined to be highly effective.
The Company considers the impact of its counterparties’ credit risk on the fair value of the foreign currency forward contracts. As of September 30, 2020 and December 31, 2019, credit risk did not change the fair value of the Company’s foreign currency forward contracts.
The following table summarizes the notional amount of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges under U.S. GAAP:
As of September 30, 2020As of December 31, 2019
Foreign Currency
(in thousands)
Euro
$632,621 $501,197 
British pound sterling
166,707 87,032 
Australian dollar
92,524 89,705 
Canadian dollar
74,749 50,452 
Total foreign currency forward contracts
$966,601 $728,386 
Foreign currency forward contracts - Not designated as hedging instruments
The Company also enters into foreign currency forward contracts with contractual maturities of less than one month, that are designed to mitigate the effect of changes in foreign exchange rates on monetary assets and liabilities, including intercompany balances. These contracts are not designated as hedging instruments under U.S. GAAP. The Company recognizes realized gains and losses for such contracts in “Other income (expense), net” in its condensed consolidated statements of operations each period. As of September 30, 2020, the notional amount of the Company’s outstanding foreign currency forward contracts where hedge accounting under U.S. GAAP is not applied was $609.9 million.
During the three and nine months ended September 30, 2020 and 2019, the Company recognized the following related to foreign currency forward contacts in its condensed consolidated statements of operations:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in thousands)
Designated as hedging instruments - Reclassified from AOCI
Product revenues, net
$(7,249)$10,304 $8,039 $25,381 
Not designated as hedging instruments
Other income (expense), net
$25,897 $(8,812)$15,724 $(10,874)
Total reported in the Condensed Consolidated Statement of Operations
Product revenues, net
$1,536,271 $949,828 $4,575,863 $2,747,461 
Other income (expense), net
$84,386 $(31,747)$139,621 $64,802 
The following table summarizes the fair value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges under U.S. GAAP included on its condensed consolidated balance sheets:
As of September 30, 2020
AssetsLiabilities
ClassificationFair ValueClassificationFair Value
(in thousands)
Prepaid expenses and other current assets
$673 
Other current liabilities
$(29,554)
Other assets
— 
Other long-term liabilities
(3,254)
Total assets
$673 
Total liabilities
$(32,808)
As of December 31, 2019
AssetsLiabilities
ClassificationFair ValueClassificationFair Value
(in thousands)
Prepaid expenses and other current assets
$9,725 
Other current liabilities
$(5,533)
Other assets
— 
Other long-term liabilities
(1,821)
Total assets
$9,725 
Total liabilities
$(7,354)
As of September 30, 2020, the Company expects the amounts that are related to foreign exchange forward contracts designated as cash flow hedges under U.S. GAAP recorded in “Prepaid expenses and other current assets” and “Other current liabilities” to be reclassified to earnings within twelve months.
The following table summarizes the potential effect of offsetting derivatives by type of financial instrument designated as cash flow hedges under U.S. GAAP on the Company’s condensed consolidated balance sheets:
As of September 30, 2020
Gross Amounts RecognizedGross Amounts OffsetGross Amounts PresentedGross Amounts Not OffsetLegal Offset
Foreign currency forward contracts(in thousands)
Total assets$673 $— $673 $(673)$— 
Total liabilities
(32,808)— (32,808)673 (32,135)
As of December 31, 2019
Gross Amounts RecognizedGross Amounts OffsetGross Amounts PresentedGross Amounts Not OffsetLegal Offset
Foreign currency forward contracts(in thousands)
Total assets$9,725 $— $9,725 $(7,354)$2,371 
Total liabilities(7,354)— (7,354)7,354 —