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Derivative Instruments
3 Months Ended
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Instruments
8. Derivative Instruments
We generally use derivative instruments to manage our interest rate and foreign currency exchange risk. We currently have derivatives classified as cash flow hedges and net investment hedges. We do not enter into any derivatives for trading or speculative purposes.
All of our derivative instruments are governed by International Swap Dealers Association, Inc. master agreements with our counterparties. As of March 31, 2024 and December 31, 2023, we have presented the fair value of our derivative instruments at the gross amounts in the condensed consolidated balance sheets as the gross fair values of our derivative instruments equaled their net fair values.
Cash flow hedges
We have entered into interest rate swap agreements, which effectively convert portions of our variable rate debt under the 2020 Credit Facility to a fixed rate for the term of the swap agreements. We designated each of the interest rate swaps as cash flow hedges at the inception of the contracts. As of March 31, 2024 and December 31, 2023, the aggregate notional values of the interest rate swaps were $935.0 million and $935.0 million, respectively. All of the contracts have maturities on or before October 2028.
We have entered into foreign currency forward contracts to hedge revenues denominated in the Canadian Dollar ("CAD") against changes in the exchange rate with the United States Dollar ("USD"). We designated each of these foreign currency forward contracts as cash flow hedges at the inception of the contracts. As of March 31, 2024 and December 31, 2023, the aggregate notional values of the foreign currency forward contracts designated as cash flow hedges that we held to buy USD in exchange for Canadian Dollars were $30.6 million CAD and $29.9 million CAD, respectively. All of the contracts have maturities of 12 months or less.
Net investment hedges
We have entered into foreign currency forward contracts to hedge a portion of the foreign currency exposure that arises on translation of our investments denominated in British Pounds ("GBP") into USD. We designated each of these foreign currency forward contracts as net investment hedges at the inception of the contracts. As of March 31, 2024 and December 31, 2023, the aggregate notional values of the foreign currency forward contracts designated as net investment hedges to reduce the volatility of the U.S. dollar value of a portion of our GBP-denominated investments was £16.6 million and £13.2 million, respectively.
The fair values of our derivative instruments were as follows as of:
Asset derivativesLiability derivatives
(dollars in thousands)Balance sheet locationMarch 31,
2024
December 31,
2023
Balance sheet locationMarch 31,
2024
December 31,
2023
Derivative instruments designated as hedging instruments:
Interest rate swaps, current portionPrepaid expenses
and other current assets
$12,328 $16,198 Accrued expenses
and other current liabilities
$— $— 
Foreign currency forward contracts, current portion
Prepaid expenses
and other current assets
260 — Accrued expenses
and other
current liabilities
92 536 
Interest rate swaps, long-term
Other assets3,965 — Other liabilities— 5,004 
Total derivative instruments designated as hedging instruments$16,553 $16,198 $92 $5,540 
The effects of derivative instruments in cash flow and net investment hedging relationships were as follows:
Gain (loss) recognized
in accumulated other
comprehensive
income (loss) as of
Location
of gain (loss)
reclassified from
accumulated other
comprehensive
income (loss) into
income (loss)
Gain reclassified from accumulated
 other comprehensive income (loss) into income (loss)
(dollars in thousands)March 31,
2024
Three months ended
March 31, 2024
Cash Flow Hedges
Interest rate swaps$16,293 Interest expense$5,473 
Foreign currency forward contracts$260 Revenue$34 
Net Investment Hedges
Foreign currency forward contracts$(92)$— 
March 31,
2023
Three months ended
March 31, 2023
Cash Flow Hedges
Interest rate swaps$17,594 Interest expense$4,499 
Foreign currency forward contracts$14 Revenue$125 
Net Investment Hedges
Foreign currency forward contracts$(417)$— 
Our policy requires that derivatives used for hedging purposes be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accumulated other comprehensive income (loss) includes unrealized gains or losses from the change in fair value measurement of our derivative instruments each reporting period and the related income tax expense or benefit. Excluding net investment hedges, changes in the fair value measurements of the derivative instruments and the related income tax expense or benefit are reflected as adjustments to accumulated other comprehensive income (loss) until the actual hedged expense is incurred or until the hedge is terminated at which point the unrealized gain (loss) and related tax effects are reclassified from accumulated other comprehensive income (loss) to current earnings. For net investment hedges, changes in the fair value measurements of the derivative instruments and the related income tax expense or benefit are reflected as adjustments to translation adjustment, a component of accumulated other comprehensive income (loss), and recognized in earnings only when the hedged GBP investment is liquidated. The estimated accumulated other comprehensive income as of March 31, 2024 that is expected to be reclassified into earnings within the next twelve months is $14.7 million. There were no ineffective portions of our interest rate swap or foreign currency forward derivatives during the three months ended March 31, 2024 and 2023. See Note 11 to these unaudited, condensed consolidated financial statements for a summary of the changes in accumulated other comprehensive income (loss) by component. We classify cash flows related to derivative instruments as operating activities in the condensed consolidated statements of cash flows.