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Note 7 - Derivative Financial Instruments | 12 Months Ended
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Dec. 31, 2022
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
7. | Derivative Financial Instruments
Foreign Exchange Derivative Contracts We operate and sell our products in various global markets and, as a result, we are exposed to changes in foreign currency exchange rates. In the fourth quarter of 2020, we began utilizing foreign currency forward contracts to offset against future movements in foreign exchange rates that affect certain existing foreign currency denominated assets and liabilities. Under this program, our strategy is to have increases or decreases in our foreign currency exposures mitigated by gains or losses on the foreign currency forward contracts to mitigate the risks and volatility associated with foreign currency transaction gains or losses. We do not use derivative financial instruments for speculative or trading purposes. For accounting purposes, our foreign currency forward contracts are not designated as hedging instruments and, accordingly, we record the fair value of these contracts as of the end of our reporting period in our consolidated balance sheets with changes in fair value recorded within foreign transaction gain (loss) in our consolidated statements of operations for both realized and unrealized gains and losses. The cash flows associated with the foreign currency forward contracts are reported in net cash provided by operating activities in our consolidated statements of cash flows. The fair value of our foreign exchange derivative contracts was determined based on current foreign currency exchange rates and forward points. All our foreign exchange derivative contracts outstanding at December 31, 2022 will mature during the first quarter of fiscal 2023. The following table provides information about our foreign currency forward contracts outstanding as of December 31, 2022 (in thousands):
Currency | Contract Position |  | Contract Amount (Local Currency) |  |  | Contract Amount (U.S. Dollars) |
Euro | Buy |  |  | 81,677 |  |  | $ | 87,300 |
Swiss Franc | Buy |  |  | 20,714 |  |  |  | 22,500 |
|  |  |  |  |  |  | $ | 109,800 |
Our foreign currency contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that utilize observable market inputs. The fair value of our foreign currency contracts as of December 31, 2022 was immaterial. The location and amount of gains (losses) related to non-designated derivative instruments in the consolidated statements of operations were as follows (in thousands):
Derivatives Not Designated | Location of Gain (Loss) |  | Fiscal Year |
as Hedging Instruments | Recognized on Derivatives |  | 2022 |  |  | 2021 |  |  | 2020 |
Foreign exchange forward contracts | Foreign transaction gain (loss) |  | $ | (5,356 | ) |  | $ | (3,428 | ) |  | $ | 756 |

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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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