XML 42 R24.htm IDEA: XBRL DOCUMENT
v3.24.3

FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES | 9 Months Ended
--- | ---
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES | FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i) hedge foreign currency risks associated with forecasted transactions (“cash flow hedges”); ii) mitigate the impact that changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and payables (“foreign currency hedges”); or iii) convert variable-interest-rate debt to fixed rates. Derivatives Designated as Hedging Instruments - Cash Flow Hedges We use currency forward contracts as cash flow hedges to manage our exposure to fluctuations in the currency exchange rates on certain forecasted production costs. Currency forward contracts involve fixing the exchange for delivery of a specified amount of foreign currency on a specified date. As of September 30, 2024, the maturity of currency forward contracts ranged from one month to 15 months. We designate certain currency forward contracts as cash flow hedges of forecasted raw material purchases, certain production costs or capital expenditures with exposure to changes in foreign currency exchange rates. Changes in the fair value of derivatives designated and that qualify as cash flow hedges of foreign exchange risk is deferred as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets. With respect to hedges of forecasted raw material purchases or production costs, the amount deferred is subsequently reclassified into costs of products sold in the period that inventory produced using the hedged transaction affects earnings. For hedged capital expenditures, deferred gains or losses are reclassified and included in the historical cost of the capital asset and subsequently affect earnings as depreciation is recognized. We had the following outstanding derivatives that were used to hedge foreign exchange risks associated with forecasted transactions and designated as hedging instruments:
In thousands | September 30, 2024 |  | December 31, 2023
Derivative |  |  |
Sell/Buy - sell notional |  |  |
Euro / British Pound | 15,338 |  | 15,210
Philippine Peso / Euro | — |  | 137,449
U.S. Dollar / British Pound | 10,335 |  | 18,470
U.S. Dollar / Euro | 67 |  | 277
Sell/Buy - buy notional |  |  |
Euro / Philippine Peso | 670,767 |  | 788,342
British Pound / Philippine Peso | 951,019 |  | 923,653
Euro / U.S. Dollar | 76,139 |  | 93,397
U.S. Dollar / Canadian Dollar | 32,211 |  | 30,914
British Pound / U.S. Dollar | — |  | 2,211
Derivatives Designated as Hedging Instruments – Net Investment Hedge The €220 million Term Loan discussed in Note 15 – “Long-Term Debt” was designated as a net investment hedge of our Euro functional currency foreign subsidiaries and was extinguished on March 30, 2023 in conjunction with the amendment of the Credit Facility. During the first nine months of 2023, we recognized a pre-tax loss of $3.7 million on the remeasurement of the term loan from changes in currency exchange rates. Such amounts are recorded as a component of Other Comprehensive Income (Loss). Derivatives Not Designated as Hedging Instruments - Foreign Currency Hedges We also entered into forward foreign exchange contracts to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities. None of these contracts are designated as hedges for financial accounting purposes and, accordingly, changes in value of the foreign exchange forward contracts and in the offsetting underlying on-balance-sheet transactions are reflected in the accompanying condensed consolidated statements of operations under the caption “Other, net.” The following sets forth derivatives used to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities:
In thousands | September 30, 2024 |  | December 31, 2023
Derivative |  |  |
Sell/Buy - sell notional |  |  |
U.S. Dollar / British Pound | 13,500 |  | 22,800
British Pound / Euro | 2,600 |  | 3,500
Japanese Yen / Euro | 53,000 |  | —
U.S. Dollar / Swiss Franc | — |  | 13,620
British Pound / Swiss Franc | 930 |  | 2,240
Euro / Swiss Franc | 8,200 |  | 4,940
Euro / U.S. Dollar | 10,300 |  | 11,000
U.S Dollar / Philippine Peso | 9,100 |  | 6,700
Sell/Buy - buy notional |  |  |
Euro / U.S. Dollar | — |  | 10,200
British Pound / Euro | 3,600 |  | 6,470
Swiss Franc / Danish Krone | — |  | —
U.S. Dollar / Canadian Dollar | 2,400 |  | 1,120
These contracts have maturities of one month from the date originally entered into. Fair Value Measurements The following table summarizes the fair values of derivative instruments for the period indicated and the line items in the accompanying condensed consolidated balance sheets where the instruments are recorded:
In thousands | September 30, 2024 |  | December 31, 2023 |  | September 30, 2024 |  | December 31, 2023
Balance sheet caption | Prepaid Expenses and Other Current Assets |  | Other Current Liabilities
Designated as hedging: |  |  |  |  |  |  |
Forward foreign currency exchange contracts | $ | 433 |  |  | $ | 851 |  |  | $ | 1,278 |  |  | $ | 1,653 |
Not designated as hedging: |  |  |  |  |  |  |
Forward foreign currency exchange contracts | $ | 184 |  |  | 937 |  |  | $ | 226 |  |  | $ | 155 |
The amounts set forth in the table above represent the net asset or liability giving effect to rights of offset with each counterparty. The effect of netting the amounts presented above did not have a material effect on our consolidated financial position. The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The fair values of the foreign exchange forward contracts are considered to be Level 2. Foreign currency forward contracts are valued using foreign currency forward and interest rate curves. The fair value of each contract is determined by comparing the contract rate to the forward rate and discounting to present value. Contracts in a gain position are recorded in the condensed consolidated balance sheets under the caption “Prepaid expenses and other current assets” and the value of contracts in a loss position is recorded under the caption “Other current liabilities.” The following table summarizes the amount of income or (loss) from derivative instruments recognized in our results of operations for the periods indicated and the line items in the accompanying condensed consolidated statements of operations where the results are recorded:
| Three months ended September 30, |  | Nine months ended September 30,
In thousands | 2024 |  | 2023 |  | 2024 |  | 2023
Designated as hedging: |  |  |  |  |  |  |
Forward foreign currency exchange contracts: |  |  |  |  |  |  |
Cost of products sold | $ | (331) |  |  | $ | (261) |  |  | $ | (457) |  |  | $ | (1,579) |
Not designated as hedging: |  |  |  |  |  |  |
Forward foreign currency exchange contracts: |  |  |  |  |  |  |
Other – net | $ | (553) |  |  | $ | 250 |  |  | $ | 2,003 |  |  | $ | 32 |
The impact of activity not designated as hedging was substantially all offset by the remeasurement of the underlying on-balance-sheet item. A rollforward of fair value amounts recorded as a component of accumulated other comprehensive loss, before taxes, is as follows:
In thousands | 2024 |  | 2023
Balance at January 1, | $ | (808) |  |  | $ | 242 |
Deferred gains on cash flow hedges | (769) |  |  | 3,128 |
Reclassified to earnings | (457) |  |  | (1,579) |
Balance at September 30, | $ | (2,034) |  |  | $ | 1,791 |
We expect substantially all of the amounts recorded as a component of accumulated other comprehensive loss will be recorded in results of operations within the next 12 to 18 months and the amount ultimately recognized will vary depending on actual market rates. Credit risk related to derivative activity arises in the event the counterparty fails to meet its obligations to us. This exposure is generally limited to the amounts, if any, by which the counterparty’s obligations exceed our obligation to them. Our policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration