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DERIVATIVE FINANCIAL INSTRUMENTS | 3 Months Ended
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Mar. 31, 2023
DERIVATIVE FINANCIAL INSTRUMENTS |
DERIVATIVE FINANCIAL INSTRUMENTS | 10. DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, and foreign exchange risk primarily through the use of derivative financial instruments. The Company enters into foreign currency contracts with 30-day maturities to hedge its short-term balance sheet exposure, primarily intercompany, that are denominated in currencies (Euro, Mexican Peso, New Zealand Dollar, Chinese Renminbi, Swedish Krona, Canadian Dollar) other than the subsidiary’s functional currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive (loss) income. To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $18,870 at March 31, 2023. The foreign currency contracts are recorded in the condensed consolidated balance sheets at fair value and resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive income. During the three months ended March 31, 2023 and 2022, the Company had gains of $11 and $54, respectively, on foreign currency contracts which is included in other expense, net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other expense, net. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements on its variable-rate debt. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In February 2017, the Company entered into three interest rate swaps with a combined notional amount of $40,000 that matured in February 2022. In March 2020, the Company entered into two additional interest rate swaps with a combined notional amount of $20,000 that increased to $60,000 in March 2022 and matures in December 2024. In March 2022 the Company entered into an additional interest rate swap with a notional amount of $40,000 that matures in December 2026. In March 2023, the Company executed amendments to the existing swaps to amend the index on the interest rate derivatives from LIBOR to SOFR, in line with the existing Amended Revolving Facility. These amendments had no material financial impact to the Company’s operations or financial position. The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2023 and 2022, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The Company estimates that $3,328 will be reclassified as a decrease to interest expense over the next twelve months related to its interest rate derivatives. The Company does not use derivatives for trading or speculative purposes. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Asset Derivatives
​ | ​ | ​ | ​ | Fair value as of:
Derivatives designated as | ​ | Balance Sheet | ​ | March 31, | ​ | December 31,
hedging instruments |  | Location |  | 2023 |  | 2022
Foreign currency contracts | ​ | Prepaid expenses and other assets | ​ | $ | 31 | ​ | $ | 48
Interest rate swaps | ​ | Other long-term assets | ​ | ​ | 5,745 | ​ | ​ | 7,236
​ | ​ | ​ | ​ | $ | 5,776 | ​ | $ | 7,284
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ The tables below present the effect of cash flow hedge accounting on other comprehensive income (“OCI”) for the three months ended March 31, 2023 and 2022: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Amount of pre-tax (loss) gain recognized | ​
​ | ​ | in OCI on derivatives | ​
Derivatives in cash flow hedging relationships | ​ | Three months ended March 31, | ​
​ |  | 2023 |  | 2022 |
Interest rate swaps | ​ | $ | (746) | ​ | $ | 3,237 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Amount of pre-tax gain (loss) reclassified | ​
​ | ​ | from accumulated OCI into income | ​
Location of gain (loss) reclassified | ​ | Three months ended March 31, | ​
from accumulated OCI into income |  | 2023 |  | 2022 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest expense | ​ | $ | 819 | ​ | $ | (186) | ​
​ The table below presents the line items that reflect the effect of the Company’s derivative financial instruments on the condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2023 and 2022:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Total amounts of income and expense | ​
​ | ​ | ​ | ​ | line items presented that reflect the | ​
​ | ​ | ​ | ​ | effects of cash flow hedges recorded | ​
​ | ​ | ​ | ​ | Three months ended March 31, | ​
Derivatives designated as hedging instruments |  | Income Statement Location |  | 2023 |  | 2022 | ​
Interest rate swaps |  | Interest Expense | ​ | $ | 2,983 | ​ | $ | 1,038 | ​
​ The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2023 and December 31, 2022. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented in the condensed consolidated balance sheets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative assets:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Net amounts | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Gross amounts | ​ | of assets | ​ | Gross amounts not offset in the consolidated
As of | ​ | Gross amounts | ​ | offset in the | ​ | presented in the | ​ | balance sheets
March 31, | ​ | of recognized | ​ | consolidated | ​ | consolidated | ​ | Financial | ​ | Cash collateral | ​ | ​ | ​
2023 |  | assets |  | balance sheets |  | balance sheets |  | instruments |  | received |  | Net amount
Derivatives | ​ | $ | 5,776 | ​ | $ | — | ​ | $ | 5,776 | ​ | $ | — | ​ | $ | — | ​ | $ | 5,776
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Net amounts | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Gross amounts | ​ | of assets | ​ | Gross amounts not offset in the consolidated
As of | ​ | Gross amounts | ​ | offset in the | ​ | presented in the | ​ | balance sheets
December 31, | ​ | of recognized | ​ | consolidated | ​ | consolidated | ​ | Financial | ​ | Cash collateral | ​ | ​ | ​
2022 |  | assets |  | balance sheets |  | balance sheets |  | instruments |  | received |  | Net amount
Derivatives | ​ | $ | 7,284 | ​ | $ | — | ​ | $ | 7,284 | ​ | $ | — | ​ | $ | — | ​ | $ | 7,284
​ ​ The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

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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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