Financial Instruments

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

NOTE 5 – FINANCIAL INSTRUMENTS

Non-marketable Equity Securities

As of December 31, 2023 and 2022, other noncurrent assets included equity securities accounted for under the equity method with a carrying amount of $4.9 million and $4.4 million, respectively. No impairments to the carrying amount of the Company’s non-marketable equity securities were recognized in the years ended December 31, 2023, 2022 and 2021, respectively.

Derivatives Instruments

In the fourth quarter of 2022, the Company initiated a foreign exchange hedging strategy to hedge local currency expenses and reduce variability associated with anticipated cash flows. The Company’s derivative financial instruments consist of foreign currency forward contracts. The maturities of these instruments are generally less than twelve months. Fair values for derivative financial instruments are based on prices computed using third-party valuation models. All the significant inputs to the third-party valuation models are observable in active markets. Inputs include current market-based parameters such as forward rates, yield curves and credit default swap pricing. For additional information related to the three-level hierarchy of fair value measurements, see Note 6—Fair Value.

The notional and fair values of all derivative instruments were as follows (in thousands):


	December 31,
	2023		2022
Derivative instruments in cash flow hedges (foreign exchange contracts):
Assets
Other current assets	$	1,184	$	—
Liabilities
Accrued liabilities		—		94
Total fair value	$	1,184	$	94
Notional value held to buy U.S. dollars in exchange for other currencies	$	738	$	—
Notional value held to sell U.S. dollars in exchange for other currencies	$	45,468	$	52,197
Undesignated derivative instruments (foreign exchange contracts):
Liabilities
Accrued liabilities	$	—	$	41
Total fair value	$	—	$	41
Notional value held to sell U.S. dollars in exchange for other currencies	$	—	$	7,402

All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparty to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company’s Consolidated Balance Sheets on a net basis.

The gross amounts of the Company’s foreign currency forward contracts and the net amounts recorded in the Company’s Consolidated Balance Sheets were as follows (in thousands):


	December 31,
	2023			2022
Gross amount of recognized assets	$	1,300		$	—
Gross amount of recognized liabilities		(116	)		(135	)
Net assets (liabilities)	$	1,184		$	(135	)

Cash Flow Hedges

The Company designates certain foreign currency forward contracts as hedging instruments pursuant to ASC 815, Derivatives and Hedging. The effective portion of the gain or loss on the derivatives are reported as a component of AOCL in stockholders’ equity and reclassified into earnings in the Consolidated Statements of Operations in the period upon which the hedged transactions are settled. For information on the unrealized gain or loss on the derivatives included in and reclassified out of the AOCL into Consolidated Statements of Operations, refer to Note 4—Composition of Certain Financial Statement Captions.

The following table summarizes the gains recognized upon settlement of the hedged transactions in the Condensed Consolidated Statement of Operations for the years ended December 31, 2023 and 2022 (in thousands):


	Year Ended December 31,
	2023		2022
Research and development	$	841	$	—
Selling, general and administrative		192		—
Total	$	1,033	$	—

Undesignated Derivatives

For derivatives that are not designated as hedge instruments, they are measured and reported at fair value as a derivative asset or liability in the Consolidated Balance Sheets with their corresponding change in the fair value recognized as gains or losses in other income, net in the Consolidated Statements of Operations. These instruments were all re-designated as foreign currency cash flow hedges in July 2023.

For the year ended December 31, 2023, gains recognized on the undesignated derivatives were $0.4 million; and for the year ended December 31, 2022, losses recognized were not significant.

The Company did not enter into any derivative contracts in 2021.