XML 23 R13.htm IDEA: XBRL DOCUMENT
v3.23.1

Derivative Financial Instruments | 3 Months Ended
--- | ---
Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments The Company principally uses derivative financial instruments to reduce the impact of foreign currency fluctuations and interest rate variability on the Company's results of operations. The principal derivative financial instruments the Company enters into are foreign exchange forward contracts and interest rate swaps. The Company does not enter into derivative financial instrument contracts for trading or speculative purposes. Foreign Exchange Derivative Instruments Foreign exchange forward contracts are foreign exchange derivative instruments primarily used to reduce foreign currency risk related to transactions denominated in a currency other than functional currency. These instruments are designated as cash flow hedges. The periods of the foreign exchange forward contracts correspond to the periods of the hedged forecasted transactions, which do not exceed 24 months subsequent to the latest balance sheet date. The primary foreign exchange forward contracts pertain to the U.S. dollar, the Japanese yen, the British pound sterling, the Canadian dollar, the Korean won and the euro. The gross U.S. dollar equivalent notional amount outstanding of all foreign exchange forward contracts designated under hedge accounting as of March 31, 2023 and December 31, 2022 was $225.3 million and $242.4 million, respectively. The Company also enters into foreign exchange forward contracts, which either do not qualify as hedging instruments or have not been designated as such, to reduce foreign currency transaction risk related to certain intercompany assets and liabilities denominated in a currency other than functional currency. These undesignated instruments are recorded at fair value as a derivative asset or liability with the corresponding change in fair value recognized in selling, general and administrative expenses. The gross U.S. dollar equivalent notional amount outstanding of all foreign exchange forward contracts not designated under hedge accounting as of both March 31, 2023 and December 31, 2022 was $4.0 million. Selling, general and administrative expenses during the three months ended March 31, 2023 and 2022 included a gain of $0.1 million and $0.3 million, respectively, related to undesignated foreign exchange forward derivative instruments. Interest Rate Derivative Instruments From time to time, the Company enters into interest rate swap contracts to reduce interest rate risk related to floating rate debt. Under the contracts, the Company pays fixed and receives variable rate interest, in effect converting a portion of its floating rate debt to fixed rate debt. Interest rate swap contracts are accounted for as cash flow hedges. As of March 31, 2023, the notional value of the Company's outstanding interest rate swap contracts was $100.0 million. As of December 31, 2022, there were no interest rate swap contracts outstanding. Impact on Financial Statements The fair value of hedge instruments recognized on the unaudited condensed consolidated balance sheets was as follows:
(in thousands) |  |  |  | March 31, |  | December 31,
Balance Sheet Location |  | Hedge Instrument Type |  | 2023 |  | 2022
Prepaid and other assets |  | Foreign exchange forward |  | $ | 6,078 |  |  | $ | 7,393 |
|  | Interest rate swap |  | 344 |  |  | — |
Other assets |  | Foreign exchange forward |  | 87 |  |  | 1,341 |
Accrued expenses and other liabilities |  | Foreign exchange forward |  | 3,817 |  |  | 4,710 |
|  | Interest rate swap |  | 17 |  |  | — |
Other noncurrent liabilities |  | Foreign exchange forward |  | 505 |  |  | 344 |
|  | Interest rate swap |  | 699 |  |  | — |
The hedge instrument gain (loss) recognized in accumulated other comprehensive loss, net of tax was as follows:
|  |  |  | Three months ended
|  |  |  | March 31,
(in thousands) |  |  |  |  |  | 2023 |  | 2022
Type of hedge |  |  |  |  |  |  |  |
Foreign exchange forward |  |  |  |  |  | $ | (477) |  |  | $ | 3,076 |
Interest rate swap |  |  |  |  |  | (356) |  |  | — |
Total |  |  |  |  |  | $ | (833) |  |  | $ | 3,076 |
Gains and losses on derivative instruments designated as cash flow hedges are reclassified from accumulated other comprehensive loss, net of tax at the time the forecasted hedged transaction impacts the statements of operations or at the time the hedge is determined to be ineffective. Based on the current valuation, during the next 12 months the Company expects to reclassify a net gain of $2.4 million related to foreign exchange derivative instruments from accumulated other comprehensive loss, net of tax, into cost of goods sold and a net gain of $0.3 million related to interest rate derivative instruments from accumulated other comprehensive loss, net of tax, into interest expense, net. For further information related to amounts recognized in accumulated other comprehensive loss, net of tax, see Note 12. The hedge instrument gain (loss) recognized on the unaudited condensed consolidated statements of operations was as follows:
|  |  |  | Three months ended
|  |  |  | March 31,
(in thousands) |  |  |  |  |  | 2023 |  | 2022
Location of gain (loss) in statements of operations |  |  |  |  |  |  |  |
Foreign exchange forward: |  |  |  |  |  |  |  |
Cost of goods sold |  |  |  |  |  | $ | 5,196 |  |  | $ | 1,355 |
Selling, general and administrative (1) |  |  |  |  |  | 210 |  |  | 675 |
Total |  |  |  |  |  | $ | 5,406 |  |  | $ | 2,030 |
Interest Rate Swap: |  |  |  |  |  |  |  |
Interest expense, net |  |  |  |  |  | $ | 15 |  |  | $ | — |
Total |  |  |  |  |  | $ | 15 |  |  | $ | — |
_______________________________________________________________________________ (1) Relates to net gains (losses) on foreign exchange forward contracts derived from previously designated cash flow hedges. Credit Risk The Company enters into derivative contracts with major financial institutions with investment grade credit ratings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit risk is generally limited to the unrealized gains in the derivative contracts. However, the Company monitors the credit quality of these financial institutions, as well as its own credit quality, and considers the risk of counterparty default to be minimal.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration