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Financial Instruments and Fair Value Measurement | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
Financial Instruments and Fair Value Measurement | Financial Instruments and Fair Value Measurement Risk management We have policies governing the use of derivative instruments and do not enter into financial instruments for trading or speculative purposes. By using derivative instruments, we are subject to credit and market risk. To minimize counterparty credit (or repayment) risk, we enter into transactions primarily with investment grade financial institutions. The market risk exposure is not hedged in a manner to completely eliminate the effects of changing market conditions on earnings or cash flow. No significant concentration of credit risk existed as of September 30, 2023 or December 31, 2022. Cash flow hedge Due to LIBOR cessation, the Company in May 2023 amended its previously existing cross-currency swaps in the amount of $197 million to update the referenced floating benchmark rate. We transitioned from US dollar LIBOR 3M to US dollar Term SOFR 3M + CAS (Credit Adjustment Spread) on September 29, 2023. Other terms of the cross-currency swaps remained unchanged. The cross-currency swap will expire on September 30, 2028, in line with the maturity of the term loan. In 2021 we adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform (“ASC 848”). This guidance permits entities to elect certain optional expedients for contract modifications for debt, and leases related to reference rate reform as well as derivative contracts and for the continued application of hedge accounting to certain hedging relationships affected by reference rate reform activities. We applied the practical expedients allowed under ASC 848 as follows: •Accounted for the modification to our term loan facility as if the modification was not substantial in accordance with ASC 470-50, Modifications and Extinguishment and thus a continuation of the existing contract. •The cross-currency swaps in cash-flow hedging relationships were not de-designated as a result of the modifications and continue to be highly effective and qualify for hedge accounting. Fair value measurement The following table summarizes outstanding financial instruments that are measured at fair value on a recurring basis:
| September 30, 2023 |  | December 31, 2022 |  | Balance Sheet Classification
| Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value |
| (In millions) |  |
Assets |  |  |  |  |  |  |  |  |
Derivatives designated as hedges: |  |  |  |  |  |  |  |  |
Cross currency swaps | $ | 197.0 |  |  | $ | 47.4 |  |  | $ | 197.0 |  |  | $ | 46.6 |  |  | Other financial assets (non-current)
Interest rate swaps | 291.3 |  |  | 6.9 |  |  | 293.3 |  |  | 9.6 |  |  | Other financial assets (non-current)
Total | $ | 488.3 |  |  | $ | 54.3 |  |  | $ | 490.3 |  |  | $ | 56.2 |  |  |
All financial instruments in the table above are classified as Level 2. We present the gross assets and liabilities of our derivative financial instruments in the Condensed Consolidated Balance Sheets. For financial assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period. There were no transfers of assets measured at fair value between Level 1 and Level 2 and there were no Level 3 investments during 2023 or 2022. The following table presents the carrying value and estimated fair value of our financial instruments that are not measured at fair value on a recurring basis for the periods presented. Short-term and Long-term debt are recorded at amortized cost in the Condensed Consolidated Balance Sheets.
| September 30, 2023 |  | December 31, 2022
| Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value
| (In millions)
Non-derivatives: |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |
Term-Loan | $ | 611.8 |  |  | $ | 605.8 |  |  | $ | 616.2 |  |  | $ | 596.8 |
China Term loan | 57.1 |  |  | 55.0 |  |  | 47.5 |  |  | 42.9 |
Total | $ | 668.9 |  |  | $ | 660.8 |  |  | $ | 663.7 |  |  | $ | 639.7 |
Term-Loan and China Term-Loan in the table above are classified as Level 2. At both September 30, 2023 and December 31, 2022, the fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short term borrowings and variable rate debt approximated their carrying values due to the short-term nature of these instruments. The following tables summarize the pre-tax effect of derivative and non-derivative instruments recorded in Accumulated other comprehensive income (loss) (“AOCI”), the gains (losses) reclassified from AOCI to earnings and additional gains (losses) recognized directly in earnings:
| Effect of Financial Instruments
| Three Months Ended Sep 30,
| Gain (Loss) Recognized in AOCI |  | Gain (Loss) Reclassified from AOCI to Income |  |  |  | Income Statement Classification
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |  |
| (In millions) |  |
Derivatives designated as hedges: |  |  |  |  |  |  |  |  |  |  |
Cross currency swaps | $ | 3.0 |  |  | $ | 9.2 |  |  | $ | 0.4 |  |  | $ | 0.4 |  |  |  |  | Interest and other financial expense, net
Interest rate swaps | (1.7) |  |  | 6.2 |  |  | — |  |  | — |  |  |  |  | Interest and other financial expense, net
Total | $ | 1.3 |  |  | $ | 15.4 |  |  | $ | 0.4 |  |  | $ | 0.4 |  |  |  |  |
| Effect of Financial Instruments
| Nine Months Ended September 30,
| Gain (Loss) Recognized in AOCI |  | Gain (Loss) Reclassified from AOCI to Income |  |  |  | Income Statement Classification
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |  |
| (In millions) |  |
Derivatives designated as hedges: |  |  |  |  |  |  |  |  |  |  |
Cross currency swaps | $ | — |  |  | $ | 30.1 |  |  | $ | 1.2 |  |  | $ | 1.3 |  |  |  |  | Interest and other financial expense, net
Interest rate swaps | (2.6) |  |  | 15.9 |  |  | — |  |  | — |  |  |  |  | Interest and other financial expense, net
Total | $ | (2.6) |  |  | $ | 46.0 |  |  | $ | 1.2 |  |  | $ | 1.3 |  |  |  |  |
Our cross currency swaps and interest rate swaps are designated as cash flow hedges of principal and interest payments related to our Term-Loan and mature in September 2028. The amount recognized in AOCI related to cash flow hedges that will be reclassified to the Condensed Consolidated Statement of Operations in the next twelve months is approximately $1.0 million. See “Note K. Financial Instruments and Fair Value Measurement”, included in our Annual Report in Form 10-K for the year ended December 31, 2022, for additional information relating to our derivatives instruments.

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//820/tableOfContent + Details
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