To reduce exposure to variability in expected future cash outflows on variable rate debt attributable to the changes in the applicable interest rates under the 2022 Credit Agreement, the Company entered into interest rate swaps to economically offset a portion of this risk.

For interest rate swap derivatives designated and that qualify as hedges for accounting purposes, the unrealized gain or loss on the derivative is recorded in Accumulated other comprehensive income (loss) (“OCI”).

As of March 31, 2023, the Company had the following outstanding interest rate swap derivatives that were used to hedge its interest rate risks:

Product

Number of Instruments

Effective Date

Maturity Date

Notional

Interest Rate Swaps

February 28, 2023

November 29, 2027

$300.0 million USD

All financial derivative instruments are carried at their fair value on the balance sheet. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the unaudited condensed consolidated balance sheets as of the dates presented:


	Asset Derivatives
(in thousands)	As of December 31, 2022			As of March 31, 2023
Derivatives designated as hedging instruments:
Interest rate swaps	Other current assets	$	—	Other current assets	$	1,049
Interest rate swaps	Other assets	—		Other assets	$	—
Total interest rate swaps		$	—		$	1,049


	Liability Derivatives
(in thousands)	As of December 31, 2022			As of March 31, 2023
Derivatives designated as hedging instruments:
Interest rate swaps	Other current liabilities	$	—	Other current liabilities	$	—
Interest rate swaps	Other liabilities	—		Other liabilities	8,024
Total interest rate swaps		$	—		$	8,024

The tables below present the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income (Loss) for the periods presented:


	Three Months Ended March 31,					Three Months Ended March 31,
(in thousands)	2022		2023			2022		2023
Derivatives in Hedging Relationships	Amount of Loss Recognized in OCI on Derivative (Included Component)				Location of Gain Reclassified from Accumulated OCI into Income	Amount of Gain Reclassified from Accumulated OCI into Income (Included Component)

Interest rate swaps	$	—	$	(6,877)	Interest expense	$	—	$	97
Total	$	—	$	(6,877)		$	—	$	97

The tables below present the effect of the Company’s cash flow hedge accounting on the unaudited condensed consolidated statements of operations and comprehensive income (loss) for the periods presented:


	Three Months Ended March 31,
(in thousands)	2022		2023
	Interest Expense		Interest Expense
Total amounts of income and expense line items in which the effects of fair value or cash flow hedges are recorded	$	6,336	$	8,608
Gain on cash flow hedging relationships
Interest rate swaps:
Amount of gain reclassified from accumulated other comprehensive income (loss) into income	$	—	$	97

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements and/or the Company has not elected to apply hedge accounting.

Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

As of March 31, 2023, the Company did not have any outstanding derivatives not designated as a hedge in qualifying hedging relationships.

The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments in the unaudited condensed consolidated statements of operations and comprehensive income (loss) for the periods presented: