XML 29 R16.htm IDEA: XBRL DOCUMENT
v3.23.1

Derivative Instruments | 3 Months Ended
--- | ---
Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments Derivatives Designated as Hedging Instruments In July 2022, the Company entered into cross-currency swap agreements 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. The agreements have notional amounts totaling $150.0 million, which decline to $75.0 million over contract periods ending on October 15, 2023 and April 15, 2024. Under the terms of the agreements, the Company is to receive net interest payments at fixed rates of approximately 2.4% to 2.6% of the notional amounts. At inception, the cross-currency swaps were designated as net investment hedges. In July 2022, immediately prior to entering into the new cross-currency swap agreements, the Company terminated its existing cross-currency swap agreements, de-designating the swaps as net investment hedges and receiving $26.2 million of cash. The cross-currency swap agreements had notional amounts totaling $250.0 million, which declined to $25.0 million over various contract periods ending between October 15, 2023 and October 15, 2027. Under the terms of the agreements, the Company was to receive net interest payments at fixed rates ranging from approximately 0.8% to 2.9% of the notional amounts. As of March 31, 2023 and December 31, 2022, 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, 2023 |  | December 31, 2022
Net Investment Hedges |  |  |  |  |  |
Cross-currency swaps |  | Other long-term liabilities |  | (9,590) |  |  | (7,090) |
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, 2023 and December 31, 2022, and the amounts reclassified from AOCI into earnings for the three and three months ended March 31, 2023 and 2022 (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, 2023 |  | As of December 31, 2022 |  | Location of Income Reclassified from AOCI into Earnings (Effective Portion) |  | 2023 |  | 2022 |  |  |  |
Net Investment Hedges |  |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps | $ | 13,460 |  |  | $ | 15,320 |  |  | 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, 2023, the Company was party to foreign currency exchange forward contracts to economically hedge changes in foreign currency rates with notional amounts of $185.7 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 September 2023. 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 (Loss) Recognized in Earnings on Derivatives |  |  |  |
|  |  |  | Three months ended March 31, |  |
|  | Location of Income (Loss) Recognized in Earnings on Derivatives |  | 2023 |  | 2022 |  |  |  |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Other income (expense), net |  | $ | (760) |  |  | $ | 810 |  |  |  |  |
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, 2023 and December 31, 2022 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, 2023 |  |  |  |  |  |  |  |  |  |
Cross-currency swaps |  | Recurring |  | $ | (9,590) |  |  | $ | — |  |  | $ | (9,590) |  |  | $ | — |
Foreign exchange contracts |  | Recurring |  | $ | (2,200) |  |  | $ | — |  |  | $ | (2,200) |  |  | $ | — |
December 31, 2022 |  |  |  |  |  |  |  |  |  |
Cross-currency swaps |  | Recurring |  | $ | (7,090) |  |  | $ | — |  |  | $ | (7,090) |  |  | $ | — |
Foreign exchange contracts |  | Recurring |  | $ | (1,790) |  |  | $ | — |  |  | $ | (1,790) |  |  | $ | — |

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