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Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2023
Summary of Significant Accounting Policies [Abstract] |
Summary of Significant Accounting Policies |
2. | Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. The unaudited consolidated financial statements include the accounts of the Company and its Subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial information as of September 30, 2023, and for the three- and nine-month periods ended September 30, 2023 and 2022. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. The consolidated balance sheet as of December 31, 2022 has been prepared using information from the audited financial statements at that date. For further information, refer to the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. The guidance provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024. The amendments in ASU 2020-04 are elective and are effective upon issuance for all entities. The Company had previously elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. In the second quarter of 2022, the Company elected the hedge accounting expedient that allows an update to the hedged risk in active hedging relationships without de-designation as the Company’s debt transitioned to the Secured Overnight Financing Rate (“SOFR”). In the fourth quarter of 2022, the Company elected the hedge accounting expedient that allows an amendment to existing hedges without de-designation as the Company’s hedges transitioned to SOFR. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. Inventory Inventories consist of the following (U.S. dollars in thousands):
|  | September 30, 2023 |  |  | December 31, 2022 |
Raw materials |  | $ | 159,807 |  |  | $ | 163,797 |
Finished goods |  |  | 131,296 |  |  |  | 182,386 |
Total Inventory, net |  | $ | 291,103 |  |  | $ | 346,183 |
Reserves of inventories consist of the following (U.S. dollars in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Beginning balance |  | $ | 41,017 |  |  | $ | 20,211 |  |  | $ | 37,267 |  |  | $ | 18,643 |
Additions(1) |  |  | 68,563 |  |  |  | 26,985 |  |  |  | 83,642 |  |  |  | 37,862 |
Disposals |  |  | (7,347) |  |  |  | (7,306) |  |  |  | (18,676) |  |  |  | (16,615) |
Ending Balance |  | $ | 102,233 |  |  | $ | 39,890 |  |  | $ | 102,233 |  |  | $ | 39,890 |
(1) | During the third quarter of 2023, the Company made the strategic decision to re-balance and narrow their product portfolio, which resulted in an incremental adjustment to the inventory carrying value. This resulted in an incremental reserve of $65.7 million. During the third quarter of 2022, the Company reserved an incremental $26.9 million of inventory.
Revenue Recognition Contract Liabilities – Customer Loyalty Programs Contract liabilities, recorded as deferred revenue within the accrued expenses line in the consolidated balance sheets, include loyalty point program deferrals with certain customers which are accounted for as a reduction in the transaction price and are generally recognized as points are redeemed for additional products. The balance of deferred revenue related to contract liabilities as of September 30, 2023 and December 31, 2022 was $11.9 million and $18.7 million, respectively. The contract liabilities impact to revenue for the three-month periods ended September 30, 2023 and 2022 was an increase of $0.8 million and an increase of $0.7 million, respectively. The impact to revenue for the nine-month periods ended September 30, 2023, and 2022 was an increase of $6.8 million and an increase of $4.3 million, respectively.

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- Definition The entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Accounting policies describe all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//235/tableOfContent + Details
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