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Derivative Instruments, Hedging Activities and Fair Value | 9 Months Ended
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Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments, Hedging Activities and Fair Value | Derivative Instruments, Hedging Activities and Fair Value Derivative Instruments and Hedging Activities The Company uses derivative instruments, including foreign currency exchange forward contracts, interest rate swaps and CCIRs, to manage certain foreign currency and interest rate exposures. Derivative instruments are viewed as risk management tools by the Company and are not used for trading or speculative purposes. All derivative instruments are recorded on the Company's Condensed Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs, such as forward rates, interest rates, the Company’s credit risk and counterparties’ credit risks, and which minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the ability to observe those inputs. Foreign currency exchange forward contracts, interest rate swaps and CCIRs are based upon pricing models using market-based inputs (Level 2). Model inputs can be verified and valuation techniques do not involve significant management judgment. The fair value of outstanding derivative contracts recorded as assets and liabilities on the Company's Condensed Consolidated Balance Sheets was as follows:
(In thousands) |  | Balance Sheet Location |  | Fair Value of Derivatives Designated as Hedging Instruments |  | Fair Value of Derivatives Not Designated as Hedging Instruments |  | Total Fair Value
September 30, 2021 |  |  |  |  |  |  |  |
Asset derivatives (Level 2): |  |  |  |  |  |  |  |
Foreign currency exchange forward contracts |  | Other current assets |  | $ | 930 |  |  | $ | 8,718 |  |  | $ | 9,648 |
Total |  |  |  | $ | 930 |  |  | $ | 8,718 |  |  | $ | 9,648 |
(In thousands) |  | Balance Sheet Location |  | Fair Value of Derivatives Designated as Hedging Instruments |  | Fair Value of Derivatives Not Designated as Hedging Instruments |  | Total Fair Value
Liability derivatives (Level 2):
Foreign currency exchange forward contracts |  | Other current liabilities |  | $ | 851 |  |  | $ | 866 |  |  | $ | 1,717 |
Interest rate swaps |  | Other current liabilities |  | 4,068 |  |  | — |  |  | 4,068 |
Interest rate swaps |  | Other liabilities |  | 1,053 |  |  | — |  |  | 1,053 |
Total |  |  |  | $ | 5,972 |  |  | $ | 866 |  |  | $ | 6,838 |
December 31, 2020 |  |  |  |  |  |  |  |
Asset derivatives (Level 2): |  |  |  |  |  |  |  |
Foreign currency exchange forward contracts |  | Other current assets |  | $ | 900 |  |  | $ | 2,777 |  |  | $ | 3,677 |
Total |  |  |  | $ | 900 |  |  | $ | 2,777 |  |  | $ | 3,677 |
Liability derivatives (Level 2):
Foreign currency exchange forward contracts |  | Other current liabilities |  | $ | 950 |  |  | $ | 4,098 |  |  | $ | 5,048 |
Interest rate swaps |  | Other current liabilities |  | 3,959 |  |  | — |  |  | 3,959 |
Interest rate swaps |  | Other liabilities |  | 3,718 |  |  | — |  |  | 3,718 |
Total |  |  |  | $ | 8,627 |  |  | $ | 4,098 |  |  | $ | 12,725 |
All of the Company's derivatives are recorded on the Condensed Consolidated Balance Sheets at gross amounts and not offset. All of the Company's interest rate swaps, CCIRs and certain foreign currency exchange forward contracts are transacted under ISDA documentation. Each ISDA master agreement permits the net settlement of amounts owed in the event of default. The Company's derivative assets and liabilities subject to enforceable master netting arrangements, if offset, would have resulted in a $1.3 million net liability at September 30, 2021 and at December 31, 2020 would not have resulted in a net asset or liability. The effect of derivative instruments on the Company's Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income (Loss) was as follows: Derivatives Designated as Hedging Instruments
|  | Amount Recognized in OCI on Derivatives |  | Location of Amount Reclassified from AOCI into Income |  | Amount Reclassified from AOCI into Income - Effective Portion or Equity
|  | Three Months Ended |  |  | Three Months Ended
|  | September 30 |  |  | September 30
(In thousands) |  | 2021 |  | 2020 |  |  | 2021 |  | 2020
Foreign currency exchange forward contracts |  | $ | 611 |  |  | $ | (1,244) |  |  | Product revenues |  | $ | (418) |  |  | $ | 174 |
Interest rate swaps |  | (27) |  |  | (95) |  |  | Interest expense |  | 872 |  |  | 739 |
CCIRs (a) |  | — |  |  | (24) |  |  | Interest expense |  | — |  |  | 312 |
|  | $ | 584 |  |  | $ | (1,363) |  |  |  |  | $ | 454 |  |  | $ | 1,225 |
|  | Amount Recognized in OCI on Derivatives |  | Location of Amount Reclassified from AOCI into Income |  | Amount Reclassified from AOCI into Income - Effective Portion or Equity
|  | Nine Months Ended |  |  | Nine Months Ended
|  | September 30 |  |  | September 30
(In thousands) |  | 2021 |  | 2020 |  |  | 2021 |  | 2020
Foreign currency exchange forward contracts |  | $ | 170 |  |  | $ | 834 |  |  | Product revenues |  | $ | (465) |  |  | $ | (1,562) |
Interest rate swaps |  | (41) |  |  | (3,835) |  |  | Interest expense |  | 2,599 |  |  | 1,849 |
CCIRs (a) |  | — |  |  | 39 |  |  | Interest expense |  | — |  |  | 912 |
|  | $ | 129 |  |  | $ | (2,962) |  |  |  |  | $ | 2,134 |  |  | $ | 1,199 |
(a) Amounts represent changes in foreign currency translation related to balances in AOCI. The location and amount of gain (loss) recognized on the Company's Condensed Consolidated Statements of Operations was as follows:
|  | Three Months Ended
|  | September 30
|  | 2021 |  |  |  | 2020
(in thousands) |  | Product Revenues |  |  |  | Interest Expense |  |  |  | Product Revenues |  |  |  | Interest Expense |  |
Total amounts of line items presented in the Condensed Consolidated Statement of Operations in which the effects of cash flow hedges are recorded |  | $ | 105,677 |  |  |  |  | $ | (16,004) |  |  |  |  | $ | 124,892 |  |  |  |  | $ | (15,794) |  |  |
Interest rate swaps: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gain or (loss) reclassified from AOCI into income |  | — |  |  |  |  | (872) |  |  |  |  | — |  |  |  |  | (739) |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gain or (loss) reclassified from AOCI into income |  | 418 |  |  |  |  | — |  |  |  |  | (174) |  |  |  |  | — |  |  |
Amount excluded from effectiveness testing recognized in earnings based on changes in fair value |  | 24 |  |  |  |  | — |  |  |  |  | 12 |  |  |  |  | — |  |  |
Amount excluded from the effectiveness testing recognized in earnings based on an amortization approach |  | (1) |  |  |  |  | — |  |  |  |  | 3 |  |  |  |  | — |  |  |
CCIRs: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss reclassified from AOCI into income |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (312) |  |  |
|  | Nine Months Ended
|  | September 30
|  | 2021 |  | 2020
(in thousands) |  | Product Revenues |  |  |  | Interest Expense |  | Product Revenues |  |  |  | Interest Expense |  |
Total amounts of line items presented in the Condensed Consolidated Statement of Operations in which the effects of cash flow hedges are recorded |  | $ | 343,171 |  |  |  |  | $ | (48,854) |  |  | $ | 333,782 |  |  |  |  | $ | (43,396) |  |  |
Interest rate swaps: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gain or (loss) reclassified from AOCI into income |  | — |  |  |  |  | (2,599) |  |  | — |  |  |  |  | (1,849) |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |
Gain or (loss) reclassified from AOCI into income |  | 465 |  |  |  |  | — |  |  | 1,562 |  |  |  |  | — |  |  |
Amount excluded from effectiveness testing recognized in earnings based on changes in fair value |  | 62 |  |  |  |  | — |  |  | 208 |  |  |  |  | — |  |  |
Amount excluded from the effectiveness testing recognized in earnings based on an amortization approach |  | (1) |  |  |  |  | — |  |  | 24 |  |  |  |  | — |  |  |
CCIRs: |  |  |  |  |  |  |  |  |  |  |  |
Loss reclassified from AOCI into income |  | — |  |  |  |  | — |  |  | — |  |  |  |  | (912) |  |  |
Derivatives Not Designated as Hedging Instruments
|  | Location of Gain (Loss) Recognized in Income on Derivatives |  | Amount of Gain (Loss) Recognized in Income on Derivatives (b)
|  |  | Three Months Ended |  | Nine Months Ended
|  |  | September 30 |  | September 30
(In thousands) |  |  | 2021 |  | 2020 |  | 2021 |  | 2020
Foreign currency exchange forward contracts |  | Cost of services and products sold |  | $ | 4,105 |  |  | $ | (12,279) |  |  | $ | 8,109 |  |  | $ | (5,001) |
(b) These gains (losses) offset amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures. Foreign Currency Exchange Forward Contracts The Company conducts business in multiple currencies and, accordingly, is subject to the inherent risks associated with foreign exchange rate movements. Foreign currency-denominated assets and liabilities are translated into U.S. dollars at the exchange rates existing at the respective consolidated balance sheet dates, and income and expense items are translated at the average exchange rates during the respective periods. The Company uses derivative instruments to hedge cash flows related to foreign currency fluctuations. Foreign currency exchange forward contracts outstanding are part of a worldwide program to minimize foreign currency exchange operating income and balance sheet exposure by offsetting foreign currency exposures of certain future payments between the Company and various subsidiaries, suppliers or customers. The unsecured contracts are with major financial institutions. The Company may be exposed to credit loss in the event of non-performance by the contract counterparties. The Company evaluates the creditworthiness of the counterparties and does not expect default by them. Foreign currency exchange forward contracts are used to hedge commitments, such as foreign currency debt, firm purchase commitments and foreign currency cash flows for certain export sales transactions. Changes in the fair value of derivatives used to hedge foreign currency denominated balance sheet items are reported directly in earnings, along with offsetting transaction gains and losses on the items being hedged. Derivatives used to hedge forecasted cash flows associated with foreign currency commitments may be accounted for as cash flow hedges, as deemed appropriate, if the criteria for hedge accounting are met. Gains and losses on derivatives designated as cash flow hedges are deferred in AOCI, a separate component of equity, and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. The ineffective portion of all hedges, if any, is recognized currently in earnings. The recognized gains and losses offset amounts recognized in cost of services and products sold principally as a result of intercompany or third-party foreign currency exposures. At September 30, 2021 and December 31, 2020 the notional amounts of foreign currency exchange forward contracts were $363.2 million and $460.5 million, respectively. These contracts are primarily denominated in British Pound Sterling and Euros and mature through March 2023. In addition to foreign currency exchange forward contracts, the Company designates certain loans as hedges of net investments in international subsidiaries. The Company recorded pre-tax net losses of $3.7 million and $0.1 million for the three and nine months ended September 30, 2021, respectively and pre-tax net gains of $4.6 million and pre-tax net losses of $7.4 million for the three and nine months ended September 30, 2020, respectively, in AOCI. Interest Rate Swaps The Company uses interest rate swaps in conjunction with certain variable rate debt issuances in order to secure a fixed interest rate. Changes in the fair value attributed to the effect of the swaps’ interest spread and changes in the credit worthiness of the counter-parties are recorded in AOCI. At September 30, 2021, the Company has entered into a series of interest rate swaps that are in effect through 2022 and have the effect of converting $200.0 million of the Term Loan Facility from floating-rate to fixed-rate. The fixed rates provided by the swaps replace the adjusted LIBOR rate in the interest calculation, ranging from 2.71% for 2021 to 3.12% for 2022. Cross-Currency Interest Rate Swaps The Company may use CCIRs in conjunction with certain debt issuances in order to secure a fixed local currency interest rate. Under these CCIRs, the Company receives interest based on a fixed or floating U.S. dollar rate and pays interest on a fixed local currency rate based on the contractual amounts in dollars and the local currency, respectively. At maturity, there is also the payment of principal amounts between currencies. Changes in the fair value attributed to the effect of the swaps' interest spread and changes in the credit worthiness of the counter-parties are recorded in AOCI. Changes in value attributed to the effect of foreign currency fluctuations are recorded on the Company's Condensed Consolidated Statements of Operations and offset currency fluctuation effects on the debt principal. The Company had no outstanding CCIRs at September 30, 2021. Fair Value of Other Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short-term borrowings approximate fair value due to the short-term maturities of these assets and liabilities. At September 30, 2021 and December 31, 2020 the total fair value of long-term debt (excluding deferred financing costs), including current maturities, was $1,378.5 million and $1,324.9 million, respectively, compared with a carrying value of $1,361.6 million and $1,300.5 million, respectively. Fair values for debt are based on pricing models using market-based inputs (Level 2) for similar issues or on the current rates offered to the Company for debt of the same remaining maturities.

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- Definition Disclosure of the entity's derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising there from, and the amounts of and methodologies and assumptions used in determining the amounts of such items. Also represents the disclosure regarding the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. + References No definition available. + Details
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