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Derivative Instruments | 3 Months Ended
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Mar. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments Derivatives Designated as Hedging Instruments The Company uses cross-currency swap contracts to hedge its net investment in Euro-denominated assets against future volatility in the exchange rate between the U.S. dollar and the Euro. By doing so, the Company synthetically converts a portion of its U.S. dollar-based long-term debt into Euro-denominated long-term debt. At inception, the Company designates its cross-currency swaps as net investment hedges. As of March 31, 2022, the Company had cross-currency swap agreements at notional amounts totaling $250.0 million, which declines to $25.0 million over various contract periods ending between April 15, 2022 and April 15, 2027. Under the terms of the agreements, the Company is to receive net interest payments at fixed rates ranging from approximately 0.8% to 2.9% of the notional amounts. As of March 31, 2022 and December 31, 2021, the fair value carrying amount of the Company's derivatives designated as hedging instruments are recorded as follows (dollars in thousands):
|  |  |  | Asset / (Liability) Derivatives
Derivatives designated as hedging instruments |  | Balance Sheet Caption |  | March 31, 2022 |  | December 31, 2021
Net Investment Hedges |  |  |  |  |  |
Cross-currency swaps |  | Other assets |  | $ | 9,680 |  |  | $ | 7,590 |
The following table summarizes the income recognized in accumulated other comprehensive income (loss) ("AOCI") on derivative contracts designated as hedging instruments as of March 31, 2022 and December 31, 2021, and the amounts reclassified from AOCI into earnings for the three months ended March 31, 2022 and 2021 (dollars in thousands):
| Amount of Income Recognized in AOCI on Derivatives (Effective Portion, net of tax) |  |  |  | Amount of Income (Loss) Reclassified from AOCI into Earnings
|  |  |  | Three months ended March 31, |  |
| As of March 31, 2022 |  | As of December 31, 2021 |  | Location of Income Reclassified from AOCI into Earnings (Effective Portion) |  | 2022 |  | 2021 |  |  |  |
Net Investment Hedges |  |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps | $ | 7,470 |  |  | $ | 5,910 |  |  | Other income (expense), net |  | $ | — |  |  | $ | — |  |  |  |  |
Over the next 12 months, the Company does not expect to reclassify any pre-tax deferred amounts from AOCI into earnings. Derivatives Not Designated as Hedging Instruments As of March 31, 2022, the Company was party to foreign currency exchange forward contracts to economically hedge changes in foreign currency rates with notional amounts of approximately $135.8 million. The Company uses foreign exchange contracts to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to certain of its receivables, payables and intercompany transactions denominated in foreign currencies. The foreign exchange contracts primarily mitigate currency exposures between the U.S. dollar and the Euro, Canadian dollar, Chinese yuan, and the Mexican peso, as well as between the Euro and British pound, and have various settlement dates through December 2022. These contracts are not designated as hedge instruments; therefore, gains and losses on these contracts are recognized each period directly into the consolidated statement of income. The following table summarizes the effects of derivatives not designated as hedging instruments on the Company's consolidated statement of income (dollars in thousands):
|  |  |  | Amount of Income Recognized in Earnings on Derivatives
|  |  |  | Three months ended March 31, |  |
|  | Location of Income Recognized in Earnings on Derivatives |  | 2022 |  | 2021 |  |  |  |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Other income (expense), net |  | $ | 810 |  |  | $ | 4,020 |  |  |  |  |
Fair Value of Derivatives The fair value of the Company's derivatives are estimated using an income approach based on valuation techniques to convert future amounts to a single, discounted amount. Estimates of the fair value of the Company's cross-currency swaps and foreign exchange contracts use observable inputs such as interest rate yield curves and forward currency exchange rates. Fair value measurements and the fair value hierarchy level for the Company's assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 are shown below (dollars in thousands):
Description |  | Frequency |  | Asset / (Liability) |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
March 31, 2022 |  |  |  |  |  |  |  |  |  |
Cross-currency swaps |  | Recurring |  | $ | 9,680 |  |  | $ | — |  |  | $ | 9,680 |  |  | $ | — |
Foreign exchange contracts |  | Recurring |  | $ | 90 |  |  | $ | — |  |  | $ | 90 |  |  | $ | — |
December 31, 2021 |  |  |  |  |  |  |  |  |  |
Cross-currency swaps |  | Recurring |  | $ | 7,590 |  |  | $ | — |  |  | $ | 7,590 |  |  | $ | — |
Foreign exchange contracts |  | Recurring |  | $ | (110) |  |  | $ | — |  |  | $ | (110) |  |  | $ | — |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://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 http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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