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Financial Instruments | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
Financial Instruments | Note 14 – 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. The Company utilizes forward currency exchange contracts to manage its foreign currency exposure. These instruments are designated as cash flow hedges and the changes in fair value of the derivatives are recorded in accumulated other comprehensive loss on 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, 2023, the Company recorded an unrealized loss of $2.3 million ($1.7 million net of tax) and an unrealized gain of $1.0 million ($0.8 million net of tax), respectively, on the forward currency exchange contracts in other comprehensive income and transferred unrealized gains of $1.2 million and $2.5 million, respectively, to cost of sales. 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 (loss) and transferred unrealized gains of $0.1 million and $0.2 million, respectively, to cost of sales (See Note 15). The Company also has forward currency exchange contracts in place as of September 30, 2023 that have not been designated as accounting hedges and, therefore, changes in fair value are recorded in other income on the condensed consolidated statements of income. As of September 30, 2023, 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 determinations of 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, Europe and Thailand. The Company utilizes an interest rate swap agreement to hedge a portion of its interest rate exposure on outstanding borrowings under the Credit Agreement. The Company entered into a new interest rate swap agreement on July 20, 2023 and as of September 30, 2023, the notional amount of this interest rate swap agreement was $128.0 million. Under the 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 4.039%. The effect of the 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 accumulated other comprehensive loss on the condensed consolidated balance sheets until earnings are affected by the variability of cash flows. During the three and nine months ended September 30, 2023, the Company recorded unrealized gains of $1.5 million ($1.1 million net of tax) and $1.0 million ($0.7 million net of tax), respectively, on the swap in other comprehensive income (loss) (See Note 15). As of December 31, 2022, the notional amount of the Company's previous interest rate swap agreement was $121.9 million and the fixed interest rate for the contract was 2.928%. During the three and nine months ended September 30, 2022, the Company recorded unrealized gains 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 (See Note 15). As of September 30, 2023 and December 31, 2022, the fair value estimates for the Company’s respective interest rate swap agreements 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 agreements 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 Value |
|  |  |  | September 30, |  |  | December 31, |
(in thousands) |  | Balance Sheet Location |  | 2023 |  |  | 2022 |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |
Forward currency exchange contracts |  | Other current assets |  | $ | 1,440 |  |  | $ | 407 |
Interest rate swap agreement |  | Other assets, net and other current assets, respectively |  | $ | 1,640 |  |  | $ | 639 |

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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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