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Derivatives | 12 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Derivatives Hedge Accounting and Hedging Programs We recognize all derivative instruments as either assets or liabilities in our consolidated balance sheets and measure them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge. We evaluate hedge effectiveness on our hedges that are designated and qualify for hedge accounting at the inception of the hedge prospectively, as well as retrospectively, and record any ineffective portion of the hedging instruments in net foreign currency transaction loss on our consolidated statements of income. The time value of purchased contracts is recorded in net foreign currency transaction loss in our consolidated statements of income. If we do not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in net foreign currency transaction losses in our consolidated statements of income. Our hedging policy establishes maximum limits for each counterparty to mitigate any concentration of risk. Balance Sheet Hedges We hedge our net recognized foreign currency denominated assets and liabilities with foreign exchange forward contracts to reduce the risk that the value of these assets and liabilities will be adversely affected by changes in exchange rates. These contracts hedge assets and liabilities that are denominated in foreign currencies and are carried at fair value as either assets or liabilities on the consolidated balance sheets with changes in the fair value recorded to net foreign currency transaction gain in our consolidated statements of income. These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the assets and liabilities being hedged. At December 31, 2022 and December 31, 2021, the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were $83.7 million and $45.0 million, respectively. Cash Flow Hedges We use foreign currency exchange rate derivatives to hedge our exposure to fluctuations in exchange rates for anticipated intercompany cash transactions between Tennant Company and its subsidiaries. We enter into these foreign exchange cross-currency swaps to hedge the foreign currency denominated cash flows associated with this intercompany loan, and accordingly, they are not speculative in nature. These cross-currency swaps are designated as cash flow hedges. The hedged cash flows as of December 31, 2021 included €152.4 million of total notional values. The loan and related swaps matured in April 2022. The Company manages its floating rate debt exposure using interest rate swaps. Fixed rate swaps are used to reduce the Company's risk of the possibility of increased interest costs. The Company entered into an aggregate $120 million notional amount of interest rate swaps effective December 1, 2022 that exchange a variable rate of interest for a fixed rate of interest of 4.076%. These interest rate swaps are designated as cash flow hedges. These swaps are scheduled to mature on December 1, 2026. Fair Value Hedges On April 5, 2022, we entered into Euro to U.S. dollar foreign exchange cross-currency swaps associated with an intercompany loan from a wholly owned European subsidiary. We enter into these foreign exchange cross-currency swaps to hedge the foreign currency risk associated with this intercompany loan, and accordingly, they are not speculative in nature. These cross-currency swaps are designated as fair value hedges. As of December 31, 2022, these cross-currency swaps included €84.8 million of total notional value. As of December 31, 2022, the aggregated scheduled interest payments over the course of the loan and related swaps amounted to €9.8 million. The scheduled maturity and principal payment of the loan and related swaps of €75.0 million are due in April 2027. Net Investment Hedges On April 5, 2022, we entered into Euro to U.S. dollar foreign exchange cross-currency swaps to hedge our exposure to adverse foreign currency exchange rate movements between Tennant Company and a wholly owned European subsidiary. We enter into these fixed-to-fixed cross-currency swap agreements to protect a designated monetary amount of the Company’s net investment in its Euro functional currency subsidiary against the risk of changes in the Euro to U.S. dollar foreign exchange rate. These cross-currency swaps are designated as net investment hedges. As of December 31, 2022, the cross-currency swaps included €75.0 million of total notional values. These swaps are scheduled to mature in April 2027. The fair value of derivative instruments on our consolidated balance sheets as of December 31 consisted of the following:
| Derivative Assets |  | Derivative Liabilities
| Balance Sheet Location |  | December 31, 2022 |  | December 31, 2021 |  | Balance Sheet Location |  | December 31, 2022 |  | December 31, 2021
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts | Other current assets |  | $ | — |  |  | $ | — |  |  | Other current liabilities |  | $ | — |  |  | $ | 10.4 |
Interest rate swaps | Other current assets |  | 0.8 |  |  | — |  |  | Other current liabilities |  | — |  |  | — |
Interest rate swaps | Other assets |  | — |  |  | — |  |  | Other liabilities |  | 1.8 |  |  | — |
Derivatives designated as fair value hedges: |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps | Other current assets |  | 1.4 |  |  | — |  |  | Other current liabilities |  | — |  |  | — |
Cross-currency swaps | Other assets |  | 0.8 |  |  | — |  |  | Other liabilities |  | — |  |  | — |
Derivatives designated as net investment hedges: |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps | Other current assets |  | 1.2 |  |  | — |  |  | Other current liabilities |  | — |  |  | — |
Cross-currency swaps | Other assets |  | 0.5 |  |  | — |  |  | Other liabilities |  | — |  |  | — |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts(a) | Other current assets |  | 0.1 |  |  | 0.3 |  |  | Other current liabilities |  | 0.3 |  |  | 0.4 |
(a)Contracts that mature within the next 12 months are included in other current assets and other current liabilities for asset derivatives and liabilities derivatives, respectively, on our consolidated balance sheets. Contracts with maturities greater than 12 months are included in other assets and other liabilities for asset derivatives and liability derivatives, respectively, in our consolidated balance sheets. Amounts included in our consolidated balance sheets are recorded net where a right of offset exists with the same derivative counterparty. As of December 31, 2022, we anticipate reclassifying approximately $3.2 million of gains from accumulated other comprehensive loss to net income during the next 12 months. The following tables include the amounts in the consolidated statements of income in which the effects of derivative instruments are recorded and the effects of derivative instruments activity on these line items for the years ended December 31, 2022 and December 31, 2021:
| 2022 |  | 2021
| Total |  | Amount of Gain (Loss) on Cash Flow Hedge Activity |  | Total |  | Amount of Gain (Loss) on Cash Flow Hedge Activity
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |
Net sales | $ | 1,092.2 |  |  | $ | — |  |  | $ | 1,090.8 |  |  | $ | (0.4) |
Interest expense, net | (7.1) |  |  | 0.7 |  |  | (7.3) |  |  | 2.4 |
Net foreign currency transaction loss | (1.2) |  |  | 4.7 |  |  | (0.7) |  |  | 12.7 |
Derivatives designated as fair value hedges: |  |  |  |  |  |  |
Interest expense, net | (7.1) |  |  | 0.9 |  |  | (7.3) |  |  | — |
Net foreign currency transaction loss | (1.2) |  |  | 2.0 |  |  | (0.7) |  |  | — |
Derivatives designated as net investment hedges |  |  |  |  |  |  |
Interest expense, net | (7.1) |  |  | 0.7 |  |  | (7.3) |  |  | — |
The effect of derivative instruments designated as hedges and derivative instruments not designated as hedges in our consolidated statements of income for the three years ended December 31 were as follows:
| 2022 |  | 2021 |  | 2020
Derivatives designated as cash flow hedges: |  |  |  |  |
Net gain (loss) recognized in other comprehensive (loss) income, net of tax(a) | $ | 3.1 |  |  | $ | 10.8 |  |  | $ | (7.4) |
Net loss reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to net sales | — |  |  | (0.3) |  |  | (0.1) |
Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest income | 0.5 |  |  | 1.9 |  |  | 2.0 |
Net gain (loss) reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to net foreign currency transaction losses | 3.6 |  | 9.7 |  | (11.6) |
Derivatives designated as fair value hedges: |  |  |  |  |
Net gain recognized in other comprehensive loss, net of tax | 2.7 |  |  | — |  |  | — |
Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net | 0.9 |  | — |  |  | — |
Derivatives designated as net investment hedges: |  |  |  |  |
Net gain recognized in other comprehensive loss, net of tax | 4.2 |  | — |  |  | — |
Net gain reclassified from accumulated other comprehensive loss into income, net of tax, effective portion to interest expense, net | 0.7 |  | — |  |  | — |
Derivatives not designated as hedging instruments: |  |  |  |  |
Net gain (loss) recognized in income(b) | $ | 1.0 |  |  | $ | 2.5 |  |  | $ | (5.0) |
(a)Net change in the fair value of the effective portion classified in other comprehensive (loss) income. (b)Classified in net foreign currency transaction losses.

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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 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
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