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Derivatives | 3 Months Ended
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Mar. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | 9. Derivatives. General. Our earnings and cash flows are subject to fluctuations due to changes in interest rates and foreign currency exchange rates, and we seek to mitigate a portion of the risks attributable to those fluctuations by entering into derivative contracts. The derivative instruments we use are interest rate swaps and foreign currency forward contracts. We recognize derivative instruments as either assets or liabilities at fair value in the accompanying consolidated balance sheets, regardless of whether hedge accounting is applied. We report cash flows arising from our hedging instruments consistent with the classification of cash flows from the underlying hedged items. Accordingly, cash flows associated with our derivative contracts are classified as operating activities in the accompanying consolidated statements of cash flows. We formally document, designate and assess the effectiveness of transactions that receive hedge accounting treatment initially and on an ongoing basis. For qualifying hedges, the change in fair value is deferred in accumulated other comprehensive income, a component of stockholders’ equity in the accompanying consolidated balance sheets, and recognized in earnings at the same time the hedged item affects earnings. Changes in the fair value of derivative instruments not designated as hedging instruments are recorded in earnings throughout the term of the derivative. Derivatives Designated as Cash Flow Hedges In December 2019, we entered into a pay-fixed, receive-variable interest rate swap with a notional amount of $75 million with Wells Fargo wherein we fixed the one-month SOFR rate on that portion of our borrowings under the Amended Fourth A&R Credit Agreement. The term of the interest rate swap expired on July 31, 2024. Foreign Currency Risk. We operate on a global basis and are exposed to the risk that our financial condition, results of operations, and cash flows could be adversely affected by changes in foreign currency exchange rates. To reduce the potential effects of foreign currency exchange rate movements on net earnings, we enter into derivative financial instruments in the form of foreign currency exchange forward contracts with major financial institutions. Our policy is to enter into foreign currency derivative contracts with maturities of up to two years. We are exposed to foreign currency exchange rate risk with respect to transactions and balances denominated in various currencies, with our most significant exposure related to transactions and balances denominated in Chinese Renminbi and Euros, among others. We do not use derivative financial instruments for trading or speculative purposes. We do not believe we are subject to any credit risk contingent features related to our derivative contracts, and we seek to manage counterparty risk by allocating derivative contracts among several major financial institutions. Derivatives Designated as Cash Flow Hedges For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is temporarily reported as a component of other comprehensive income and then reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. We entered into forward contracts on various foreign currencies to manage the risk associated with forecasted exchange rates which impact revenues, cost of sales, and operating expenses in various international markets. The objective of the forward contracts is to reduce the variability of cash flows associated with the forecasted purchase or sale of the foreign currencies. As of March 31, 2025 and December 31, 2024, we had entered into foreign currency forward contracts, which qualified as cash flow hedges, with aggregate notional amounts of $179.9 million and $117.5 million, respectively. Derivatives Not Designated as Cash Flow Hedges We forecast our net exposure in various receivables and payables to fluctuations in the value of various currencies, and we enter into foreign currency forward contracts to mitigate a portion of that exposure. As of March 31, 2025 and December 31, 2024, we had entered into foreign currency forward contracts related to those balance sheet accounts with aggregate notional amounts of $100.6 million and $95.7 million, respectively. Balance Sheet Presentation of Derivative Instruments. As of March 31, 2025 and December 31, 2024, all derivative instruments, both those designated as hedging instruments and those that were not designated as hedging instruments, were recorded at fair value on a gross basis on our consolidated balance sheets. We are not subject to any master netting agreements. The fair value of derivative instruments on a gross basis was as follows on the dates indicated (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair Value of Derivative Instruments Designated as Hedging Instruments |  | Balance Sheet Location |  | March 31, 2025 |  | December 31, 2024
Assets |  |  |  | ​ |  |  | ​ |
Foreign currency forward contracts |  | Prepaid expenses and other assets | ​ | $ | 2,120 | ​ | $ | 3,771
Foreign currency forward contracts |  | Other assets (long-term) | ​ | ​ | 526 | ​ |  | 1,064
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(Liabilities) |  |  | ​ |  |  | ​ |  |
Foreign currency forward contracts |  | Accrued expenses | ​ |  | (1,533) | ​ |  | (1,332)
Foreign currency forward contracts |  | Other long-term obligations | ​ |  | (427) | ​ |  | (287)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair Value of Derivative Instruments Not Designated as Hedging Instruments |  | Balance Sheet Location |  | March 31, 2025 |  | December 31, 2024
Assets |  |  | ​ |  |  | ​ |  |
Foreign currency forward contracts |  | Prepaid expenses and other assets | ​ | $ | 1,839 | ​ | $ | 2,595
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(Liabilities) |  |  | ​ |  |  | ​ |  |
Foreign currency forward contracts |  | Accrued expenses | ​ |  | (877) | ​ |  | (1,288)
​ Income Statement Presentation of Derivative Instruments. Derivative Instruments Designated as Cash Flow Hedges Derivative instruments designated as cash flow hedges had the following effects, before income taxes, on other comprehensive income (“OCI”), accumulated other comprehensive income (“AOCI”), and net earnings in our consolidated statements of income, consolidated statements of comprehensive income and consolidated balance sheets (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Amount of Gain/(Loss) | ​ | ​ | ​ | Consolidated Statements | ​ | Amount of Gain/(Loss)
​ | ​ | Recognized in OCI | ​ | ​ | ​ | of Income | ​ | Reclassified from AOCI
​ | ​ | Three Months Ended March 31, |  | ​ |  | Three Months Ended March 31, | ​ | Three Months Ended March 31,
Derivative instrument |  | 2025 |  | 2024 |  | Location in statements of income |  | 2025 |  |  | 2024 |  | 2025 |  |  | 2024
Interest rate swap | ​ | $ | — | ​ | $ | 348 | ​ | Interest expense | ​ | $ | (6,568) | ​ | $ | (8,046) | ​ | $ | — | ​ | $ | 702
Foreign currency forward contracts | ​ |  | (1,897) | ​ |  | 4,166 | ​ | Revenue | ​ |  | 355,351 | ​ |  | 323,508 | ​ |  | 1,021 | ​ |  | 413
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Cost of sales | ​ |  | (183,331) | ​ |  | (171,793) | ​ |  | (532) | ​ |  | 427
​ As of March 31, 2025, $1.1 million, or $0.8 million after taxes, was expected to be reclassified from AOCI to earnings in revenue and cost of sales over the succeeding twelve months. Derivative Instruments Not Designated as Hedging Instruments The following gains/(losses) from these derivative instruments were recognized in our consolidated statements of income for the periods presented (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Three Months Ended March 31,
Derivative Instrument |  | Location in statements of income |  | 2025 |  | 2024
Foreign currency forward contracts |  | Other income (expense) — net | ​ | $ | (158) | ​ | $ | 883
​

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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