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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2022
Derivative Financial Instruments [Abstract] |
Derivative Financial Instruments | NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS The Company’s primary exchange rate risk management objective is to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates. The Company primarily focuses on mitigating changes in cash flows resulting from sales denominated in currencies other than the U.S. dollar. The Company manages this risk primarily by using currency forward and option contracts. If the anticipated transactions are deemed probable, the resulting relationships are formally designated as cash flow hedges. The Company accounts for these contracts as cash flow hedges and tests effectiveness by determining whether changes in the expected cash flow of the derivative offset, within a range, changes in the expected cash flow of the hedged item. As of September 30, 2022, the Company held commodity derivative contracts, with remaining maturities of less than one year, to mitigate the risk of commodity price fluctuations associated with raw material costs. The notional amount of the commodity derivative contracts as of September 30, 2022 was 771 pounds. These contracts are not designated as accounting hedges and the changes in fair value of the instruments are recognized in earnings. During the three and nine months ended September 30, 2022, losses of $(322) and $(875), respectively, were recorded in other, net expense. During the nine months ending September 30, 2021, the Company held currency forward contracts to mitigate currency fluctuations related to the cash purchase price of Rhino-Rack totaling $AUD 193,650 with a maturity date of July 1, 2021. These contracts were not designated as accounting hedges and the changes in fair value of the instruments were recognized in earnings. During the three and nine months ended September 30, 2021, gains (losses) of $232 and $(4,281) were recorded in other, net expense, respectively. At September 30, 2022, the Company’s derivative contracts had remaining maturities of less than one year. The counterparties to these transactions had both long-term and short-term investment grade credit ratings. The maximum net exposure of the Company’s credit risk to the counterparties is generally limited to the aggregate unrealized loss of all contracts with that counterparty. At September 30, 2022, there was no such exposure to the counterparties. The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain of $2,129 on all contracts at September 30, 2022. The Company’s derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions. The Company held the following contracts designated as hedging instruments as of September 30, 2022 and December 31, 2021:
| September 30, 2022
| Notional |  | Latest
| Amount |  | Maturity
Foreign exchange contracts - Canadian Dollars | $8,604 |  | February 2023
Foreign exchange contracts - Euros | € 13,370 |  | February 2023
| December 31, 2021
| Notional |  | Latest
| Amount |  | Maturity
Foreign exchange contracts - Canadian Dollars | $14,850 |  | February 2023
Foreign exchange contracts - Euros | € 20,104 |  | February 2023
For contracts that qualify as effective hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive loss and reclassified to sales in the period the underlying hedged transaction is recognized in earnings. Gains (losses) of $1,218 and $201 were reclassified to sales during the three months ended September 30, 2022 and 2021, respectively, and $2,081 and $(542) were reclassified to sales during the nine months ended September 30, 2022 and 2021, respectively. The following table presents the balance sheet classification and fair value of derivative instruments as of September 30, 2022 and December 31, 2021:
| Classification |  | September 30, 2022 |  | December 31, 2021
Derivative instruments in asset positions: |  |  |  |  |  |  |
Designated forward exchange contracts | Prepaid and other current assets |  | $ | 2,674 |  | $ | 491
Designated forward exchange contracts | Other long-term assets |  | $ | - |  | $ | 20
Derivative instruments in liability positions: |  |  |  |  |  |  |
Undesignated commodity derivative contracts | Accrued liabilities |  | $ | 545 |  | $ | -
Designated forward exchange contracts | Other long-term liabilities |  | $ | - |  | $ | 24

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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