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Financial Instruments | 9 Months Ended
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Sep. 30, 2022
Fair Value Disclosures [Abstract] |
Financial Instruments | Note 15 – Financial Instruments The Company’s financial instruments include cash equivalents, accounts receivable, other receivables, accounts payable, accrued liabilities and long-term debt. The Company believes that the carrying values of these instruments approximate fair value because of their short-term nature. The Company uses derivative instruments to manage the variability of foreign currency obligations and interest rates. The Company does not enter into derivatives for speculative purposes. On July 30, 2021, the Company entered into forward currency exchange contracts designated as cash flow hedges of forecasted foreign currency expenses with a notional amount of $12.5 million as of September 30, 2022. Changes in the fair value of the derivatives are recorded in accumulated other comprehensive loss in the condensed consolidated balance sheets until earnings are affected by the variability of the cash flows. During the three and nine months ended September 30, 2022, the Company recorded an unrealized loss of less than $0.1 million (less than $0.1 million net of tax) and an unrealized gain of $0.4 million ($0.3 million net of tax), respectively, on the forward currency exchange contracts in other comprehensive income and transferred unrealized gains of $0.1 million and $0.2 million, respectively, to cost of sales (See Note 16). T he Company also has forward currency exchange contracts in place as of September 30, 2022 that have not been designated as accounting hedges and, therefore, changes in fair value are recorded within the condensed consolidated statements of income. As of September 30, 2022, the fair value estimates for the Company's forward currency exchange contracts were based on Level 2 inputs of the fair value hierarchy, which includes obtaining directly or indirectly observable values from third parties active in the relevant markets. Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for currencies. The Company enters into forward currency exchange contracts for its operations in Mexico and Europe. The Company has an interest rate swap agreement, with a notional amount of $123.8 million and $129.4 million as of September 30, 2022 and December 31, 2021, respectively, to hedge a portion of its interest rate exposure on outstanding borrowings under the Credit Agreement. Under this interest rate swap agreement, the Company receives variable rate interest payments based on the one-month LIBOR rate and pays fixed rate interest payments. The fixed interest rate for the contract is 2.928%. The effect of this swap is to convert a portion of the floating rate interest expense to fixed interest rate expense. Based on the terms of the interest rate swap contract and the underlying borrowings outstanding under the Credit Agreement, the interest rate contract was determined to be highly effective, and thus qualifies and has been designated as a cash flow hedge. As such, changes in the fair value of the interest rate swap are recorded in other comprehensive income on the accompanying condensed consolidated balance sheets until earnings are affected by the variability of cash flows. During the three and nine months ended September 30, 2022, the Company recorded an unrealized gain of $1.0 million ($0.7 million net of tax) and $5.3 million ($4.0 million net of tax), respectively, on the swap in other comprehensive income. During the three and nine months ended September 30, 2021, the Company recorded an unrealized gain of $0.9 million ($0.6 million net of tax) and $3.0 million ($2.2 million net of tax), respectively, on the swap in other comprehensive income (loss). See Note 16. As of September 30, 2022, the fair value estimate for the Company's interest rate swap agreement were based on Level 2 inputs of the fair value hierarchy, as the Company obtained the valuation from a third party active in relevant markets. The valuation of the swap is primarily measured through various pricing models or discounted cash flow analysis that incorporate observable market parameters, such as interest rate yield curves and volatility. The following table presents the fair value of the Company's derivative instruments:
|  | Fair Values of Derivative Instruments |
|  | Asset Derivatives |  |  | Liability Derivatives |
|  | Balance Sheet |  | September 30, |  |  | December 31, |  |  | Balance Sheet |  | September 30, |  |  | December 31, |
(in thousands) |  | Location |  | 2022 |  |  | 2021 |  |  | Location |  | 2022 |  |  | 2021 |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward currency exchange contracts |  | Other current assets |  | $ | 247 |  |  | $ | — |  |  | Accrued liabilities |  | $ | — |  |  | $ | 178 |
Interest rate swap |  | Other current assets |  | $ | 976 |  |  | $ | — |  |  | Accrued liabilities |  | $ | — |  |  | $ | 4,332 |

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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