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Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2021
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants as of the measurement date. Fair value is measured using the fair value hierarchy and related valuation methodologies as defined in the authoritative literature. This guidance provides a fair value framework that requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment.
The three levels are defined as follows:
Level 1 - Quoted prices in active markets for identical assets and liabilities.
Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets.
Level 3 - Significant unobservable inputs reflecting management's own assumptions about the inputs used in pricing the asset or liability.
The Company’s financial instruments historically consisted of cash and cash equivalents, accounts receivable, accounts payable, debt, interest rate swaps and foreign currency derivatives. Cash and cash equivalents, accounts receivable and accounts payable carrying values as of December 31, 2021 and December 31, 2020 approximate fair value due to the short-term maturities of these financial instruments. As of December 31, 2021 and 2020, the carrying amounts of the WF Term Loans and WF Revolving Loan approximate fair value due to the short-term nature of the underlying variable rate LIBOR agreements. The FGI Term Loan approximate fair value as of December 31, 2021 and 2020 due to the immaterial movement in interest rates since the Company entered into the Promissory Note on October 20, 2020.
Derivative and hedging activities
Foreign currency derivatives
The Company conducts business in foreign countries and pays certain expenses in foreign currencies; therefore, the Company is exposed to foreign currency exchange risk between the U.S. Dollar and foreign currencies, which could impact the Company’s operating income and cash flows. To mitigate risk associated with foreign currency exchange, the Company entered into forward contracts to exchange a fixed amount of U.S. Dollars for a fixed amount of foreign currency, which
were used to fund future reign currency cash flows. At inception, all forward contracts were formally documented as cash flow hedges and were measured at fair value each reporting period.
Derivatives are formally assessed both at inception and at least quarterly thereafter, to ensure that derivatives used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged item. If it is determined that a derivative ceases to be a highly effective hedge, or if the anticipated transaction is no longer probable of occurring, hedge accounting is discontinued, and any future mark-to-market adjustments are recognized in earnings. The effective portion of gain or loss is reported in accumulated other comprehensive income and the ineffective portion is reported in earnings. The impacts of these contracts were largely offset by gains and losses resulting from the impact of changes in exchange rates on transactions denominated in the foreign currency. As of December 31, 2021 and 2020 the Company had no outstanding foreign currency derivatives.
Interest Rate Swaps
The Company entered into interest rate swap contracts to fix the interest rate on an initial aggregate amount of $35,000,000 thereby reducing exposure to interest rate changes. The Company paid a fixed rate of 2.49% to the counterparty and receives 30 day LIBOR for both cash flow hedges. At inception, all interest rate swaps were formally documented as cash flow hedges and are measured at fair value each reporting period. During the 2020 year, the Company closed the positions, see Note 9 – Debt, for additional information.
Financial statements impacts
The following tables summarize the amount of unrealized / realized gain and loss recognized in Accumulated Comprehensive Income (AOCI) for the years ended December 31, 2021, 2020 and 2019 (in thousands):
Derivatives in
subtopic 815-20
Cash Flow
Hedging
Relationship		Amount of Unrealized Gain or
(Loss) Recognized in Accumulated
Other Comprehensive Income on
Derivative
Location of Gain or
(Loss) Reclassified
from Accumulated
Other Comprehensive Income(A)
Amount of Realized Gain or (Loss)
Reclassified from Accumulated
Other Comprehensive Income
202120202019202120202019
Foreign exchange contracts$— $142 $1,499 Cost of goods sold$— $526 $272 
Selling, general and administrative expense$— $68 $25 
Interest rate swaps$— $(915)$(708)Interest Expense$— $(1,620)$(67)
(A) The foreign currency derivative activity reclassified from Accumulated Other Comprehensive Income is allocated to cost of goods sold and selling, general and administrative expense based on the percentage of Mexican Peso spend.