XML 31 R16.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Derivatives and Hedging Activities (Notes) | 12 Months Ended
--- | ---
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | DERIVATIVES AND HEDGING ACTIVITIES Hedge Accounting and Hedging Program The purposes of our cash flow hedging programs are to manage the foreign currency exchange rate risk on forecasted expenses denominated in currencies other than the functional currency of the operating unit, and to manage floating interest rate risk associated with future interest payments on variable-rate term loans issued in January 2022. We do not issue derivatives for trading or speculative purposes. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative instruments we utilize, including various foreign exchange contracts and interest rate swaps, are designated and qualify as cash flow hedges. Our derivative instruments are recorded at fair value on the consolidated balance sheets and are classified based on the instrument's maturity date. We record changes in the fair value of the effective portion of the gain or loss on the derivative instrument as a component of other comprehensive (loss) income and we reclassify that gain or loss into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. Foreign Currency Exchange Rate Risk Forward Exchange Forward Contracts We enter into foreign exchange forward contracts to hedge a portion of our forecasted foreign currency-denominated revenues and expenses to minimize the effect of foreign exchange rate movements on the related cash flows. These contracts are agreements to buy or sell a quantity of a currency at a predetermined future date and at a predetermined exchange rate. Our current foreign exchange forward contracts hedge exposures principally denominated in Mexican Pesos ("MXN"), Euros, Japanese Yen ("JPY"), Chinese Renminbi ("CNH"), Canadian Dollar ("CAD"), U.S. Dollar ("USD") and Australian Dollar ("AUD") and have varying maturities with an average term of approximately twelve months. The total notional amount of these outstanding derivative contracts as of December 31, 2023 was $172.6 million, which included the notional equivalent of $27.1 million in MXN, $35.6 million in Euros, $17.4 million in JPY, $8.1 million in CNH, $18.4 million in CAD, $14.2 million in AUD, $42.6 million in USD and $9.2 million in other foreign currencies, with terms currently through November 2025. Cross-currency Par Forward Contracts We entered into cross-currency par forward contracts to hedge a portion of our Mexico forecasted expenses denominated in MXN. These contracts are agreements to exchange cash flows from one currency to another at specified intervals over the contract term with all exchanges occurring at the same predetermined rate. In March 2020, we entered into a one-year cross-currency par forward contract. The total notional amount of this outstanding derivative as of December 31, 2020 was approximately 436.8 million MXN. The term of this one-year contract was November 3, 2020 to December 1, 2021. The derivative instrument matured in equal monthly amounts at a fixed forward rate of 24.26 MXN/USD. In November 2021, we entered into a one-year cross-currency par forward contract. The total notional amount of this outstanding derivative as of December 31, 2021 was approximately 413.1 million MXN. The term of this one-year contract was December 1, 2021 to December 1, 2022. The derivative instrument matured in equal monthly amounts at a fixed forward rate of 21.60 MXN/USD. Floating Interest Rate Risk In November 2021, in anticipation of entering into the new senior secured credit facilities in January 2022, which included a variable-rate term loan A and a variable-rate term loan B (see Note 11: Long-Term Obligations), we entered into two forward-starting interest rate swaps. In February 2022, certain terms under the agreements were amended to reflect the transition from LIBOR to the Secured Overnight Financing Rate ("SOFR"), an alternative reference rate. Under the interest rate swap agreements we exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount. The term loan A swap, as amended, has an initial notional amount of $300.0 million, reducing to $150.0 million evenly on a quarterly basis through its final maturity on March 30, 2027. We pay a fixed rate of 1.32% and will receive the greater of 3-month USD SOFR or (0.15)%. The total notional amount of this outstanding derivative as of December 31, 2023 was approximately $244.7 million. The term loan B swap, as amended, has an initial notional amount of $750.0 million, reducing to $46.9 million evenly on a quarterly basis through its final maturity on March 30, 2026. We pay a fixed rate of 1.17% and receive the greater of 3-month USD SOFR or 0.35%. The total notional amount of this outstanding derivative as of December 31, 2023 was approximately $421.9 million. In June 2023, we entered into an additional interest rate swap that hedges both term loan A and term loan B interest payments. The total notional amount of the swap is $300.0 million. The hedge matures on June 30, 2028. We pay a fixed rate of 3.88% and receive 3-months USD SOFR. These forward-starting swaps effectively convert the relevant portion of the floating-rate term loans to fixed rates. The following table presents the fair values of our derivative instruments included within the consolidated balance sheets (in thousands):
|  | Derivatives Designated as Cash Flow Hedging Instruments |  |
Consolidated Balance Sheet Location |  | Foreign Exchange Forward Contracts |  | Interest Rate Swaps |  | Gross Derivatives
As of December 31, 2023 |  |  |  |  |  |
Prepaid expenses and other current assets |  | $ | 6,785 |  |  | $ | 23,065 |  |  | $ | 29,850 |
Other assets |  | 673 |  |  | 4,876 |  |  | 5,549 |
Total assets |  | $ | 7,458 |  |  | $ | 27,941 |  |  | $ | 35,399 |
Accrued liabilities |  | $ | 2,590 |  |  | $ | — |  |  | $ | 2,590 |
Other long-term liabilities |  | 240 |  |  | — |  |  | 240 |
Total liabilities |  | $ | 2,830 |  |  | $ | — |  |  | $ | 2,830 |
|  | Derivatives Designated as Cash Flow Hedging Instruments |  |
As of December 31, 2022 |  | Foreign Exchange Forward Contracts |  | Forward-Starting Interest Rate Swaps |  | Gross Derivatives
Prepaid expenses and other current assets |  | $ | 4,860 |  |  | $ | 28,431 |  |  | $ | 33,291 |
Other assets |  | 94 |  |  | 26,753 |  |  | 26,847 |
Total assets |  | $ | 4,954 |  |  | $ | 55,184 |  |  | $ | 60,138 |
Accrued liabilities |  | $ | 1,847 |  |  | $ | — |  |  | $ | 1,847 |
Other long-term liabilities |  | 167 |  |  | — |  |  | 167 |
Total liabilities |  | $ | 2,014 |  |  | $ | — |  |  | $ | 2,014 |
The following table presents the effects of our derivative instruments designated as cash flow hedges on the Consolidated Statements of Operations (in thousands):
| Gain Reclassified From Accumulated Other Comprehensive (Loss) Income into Income
| Location of Gain in the Consolidated Statements of Operations |  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
Derivatives designated as cash flow hedging instruments: |  |  |  |  |  |  |
Foreign exchange forward contracts | Total revenues |  | $ | 296 |  |  | $ | 3,829 |  |  | $ | — |
Foreign exchange forward contracts | Cost of goods sold |  | 7,852 |  |  | 7,751 |  |  | 3,444 |
Foreign exchange forward contracts | Other expense, net(1) |  | 229 |  |  | — |  |  | — |
Foreign exchange forward contracts | Interest expense(2) |  | 13 |  |  | 717 |  |  | — |
Interest rate swaps | Interest expense |  | 32,444 |  |  | 6,122 |  |  | — |
Total derivatives designated as cash flow hedging instruments |  |  | $ | 40,834 |  |  | $ | 18,419 |  |  | $ | 3,444 |
_______________________________ (1) Represents location of gain reclassified from accumulated other comprehensive income (loss) into other expense, net as a result of ineffectiveness. (2) Represents location of gain reclassified from accumulated other comprehensive income (loss) into interest expense as a result of a forecasted transaction being no longer probable of occurring. We recognized the following gains (losses) on our derivative instruments designated as cash flow hedges in other comprehensive income (loss) before reclassifications to income (in thousands):
|  | Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
Derivatives designated as cash flow hedging instruments: |  |  |  |  |  |
Foreign exchange forward contracts |  | $ | 10,788 |  |  | $ | 9,588 |  |  | $ | 950 |
Interest rate swaps |  | 5,200 |  |  | 62,786 |  |  | (1,480) |
Total derivatives designated as cash flow hedging instruments |  | $ | 15,988 |  |  | $ | 72,374 |  |  | $ | (530) |
As of December 31, 2023, we expect an estimated $4.2 million in deferred gains on the outstanding foreign exchange forward contract and an estimated $23.9 million in deferred gains on the forward-starting interest rate swaps will be reclassified from accumulated other comprehensive loss to net income during the next 12 months concurrent with the underlying hedged transactions also being reported in net (loss) income.

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://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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration