Cash Flow Hedges of Interest Rate Risk - In March 2024 and December 2023, OSI entered into 11 interest rate swap agreements with ten counterparties (the “Swap Transactions”) to manage its exposure to fluctuations in variable interest rates. The Swap Transactions have an aggregate notional amount of $375.0 million and include one and two-year tenors with the following terms:


NOTIONAL AMOUNT		WEIGHTED AVERAGE FIXED INTEREST RATE (1)	EFFECTIVE DATE	TERMINATION DATE
$	100,000,000	4.92%	December 29, 2023	December 31, 2024
100,000,000		4.34%	December 29, 2023	December 31, 2025
175,000,000		4.40%	March 29, 2024	March 31, 2026
$	375,000,000	4.52%

(1)The weighted average fixed interest rate excludes the term SOFR adjustment and interest rate spread described below.

In connection with the Swap Transactions, the Company effectively converted $375.0 million of its outstanding indebtedness from SOFR, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points, to the weighted average fixed interest rates within the table above, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points. The Swap Transactions have an embedded floor of minus 0.10%.

The Swap Transactions have been designated and qualify as cash flow hedges, are recognized on the Company’s Consolidated Balance Sheets at fair value and are classified based on the instruments’ maturity dates. The Company estimates $1.9 million of interest expense will be reclassified from AOCL to Interest expense, net over the next 12 months related to its Swap Transactions.

The following table presents the fair value and classification of the Company’s swap agreements as of the periods indicated:


(dollars in thousands)	SEPTEMBER 29, 2024		DECEMBER 31, 2023		CONSOLIDATED BALANCE SHEET CLASSIFICATION
Interest rate swaps - asset (1)	$	—	$	320	Other current assets, net



Interest rate swaps - liability	$	1,617	$	253	Accrued and other current liabilities
Interest rate swaps - liability	1,879		893		Other long-term liabilities, net
Total fair value of derivative instruments - liabilities (1)	$	3,496	$	1,146

By utilizing the interest rate swaps, the Company is exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivative contract. To mitigate this risk, the Company enters into derivative contracts with major financial institutions based upon credit ratings and other factors. The Company continually assesses the creditworthiness of its counterparties. As of September 29, 2024, all counterparties to the Swap Transactions performed in accordance with their contractual obligations.

As of September 29, 2024 and December 31, 2023, the fair value of the Swap Transactions was in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk, of $3.3 million and $0.8 million, respectively. As of September 29, 2024 and December 31, 2023, the Company has not posted any collateral related to the Swap Transactions.

The Swap Transactions contain provisions whereby the Company could be declared in default on its derivative obligations if the repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on indebtedness. If the Company had breached any of these provisions as of September 29, 2024 and

December 31, 2023, it could have been required to settle its obligations under the Swap Transactions at their termination value of $3.3 million and $0.8 million, respectively.