Derivative Instruments

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Derivatives Designated as Hedging Instruments

The Company uses cross-currency swap contracts to hedge its net investment in Euro-denominated assets against future volatility in the exchange rate between the U.S. dollar and the Euro. By doing so, the Company synthetically converts a portion of its U.S. dollar-based long-term debt into Euro-denominated long-term debt. At inception, the cross-currency swaps were designated as net investment hedges.

In November 2020, the Company entered into additional cross-currency swap agreements at notional amounts declining from $50.0 million to $25.0 million over the contract period ending April 15, 2025. Under the terms of the swap agreements, the Company is to receive net interest payments at a fixed rate of approximately 0.8% of the notional amount. As of December 31, 2020, the notional amount of these cross-currency swaps was $50.0 million.

In October 2018, the Company entered into cross-currency swap agreements at notional amounts declining from $125.0 million to $75.0 million over the contract period ending October 15, 2023. Under the terms of the swap agreements, the Company is to receive net interest payments at a fixed rate of approximately 2.9% of the notional amount. As of December 31, 2020, the notional amount of these cross-currency swaps was $100.0 million.

In October 2018, immediately prior to entering into the new cross-currency swap agreements, the Company terminated its existing cross-currency swap agreements, de-designating the swaps as net investment hedges and receiving approximately $1.1 million of cash.

As of December 31, 2020 and 2019, the fair value carrying amount of the Company's derivatives designated as hedging instruments are recorded as follows (dollars in thousands):

		Asset / (Liability) Derivatives
Derivatives designated as hedging instruments	Balance Sheet Caption	December 31, 2020		December 31, 2019
Net Investment Hedges
Cross-currency swaps	Other assets	$	—	$	4,460
Cross-currency swaps	Other long-term liabilities	(5,000)		—

The following table summarizes the income recognized in AOCI on derivative contracts designated as hedging instruments as of December 31, 2020 and 2019, and the amounts reclassified from AOCI into earnings for the years ended December 31, 2020, 2019 and 2018 (dollars in thousands):

	Amount of Income (Loss) Recognized in AOCI on Derivative (Effective Portion, net of tax)				Location of Loss Reclassified from AOCI into Earnings (Effective Portion)	Amount of Loss Reclassified from AOCI into Earnings
	As of December 31,					Year ended December 31,
	2020		2019			2020		2019		2018
Net Investment Hedges
Cross-currency swaps	$	(3,580)	$	4,230	Other expense, net	$	—	$	—	$	—

Over the next 12 months, the Company does not expect to reclassify any pre-tax deferred amounts from AOCI into earnings.

Derivatives Not Designated as Hedging Instruments

As of December 31, 2020, the Company was party to foreign currency exchange forward contracts to economically hedge changes in foreign currency rates with notional amounts of approximately $96.3 million. The Company uses foreign exchange contracts to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to certain of its receivables, payables and intercompany transactions denominated in foreign currencies. The foreign exchange contracts primarily mitigate currency exposures between the U.S. dollar and the Euro, British pound, Mexican peso and the Chinese yuan, and have various settlement dates through April 2021. These contracts are not designated as hedging instruments; therefore, gains and losses on these contracts are recognized each period directly into the consolidated statement of operations.

The following table summarizes the effects of derivatives not designated as hedging instruments on the Company's consolidated statement of operations (dollars in thousands):

		Amount of Loss Recognized in Earnings on Derivatives
		Year ended December 31,
	Location of Loss Recognized in Earnings on Derivatives	2020		2019		2018
Derivatives not designated as hedging instruments
Foreign exchange contracts	Other income (expense), net	$	(470)	$	(600)	$	—

Fair Value of Derivatives

The fair value of the Company's derivative instruments are estimated using an income approach based on valuation techniques to convert future amounts to a single, discounted amount. Estimates of the fair value of the Company's cross-currency swaps use observable inputs such as interest rate yield curves and forward currency exchange rates. Fair value measurements and the fair value hierarchy level for the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019 are as follows (dollars in thousands):

Description	Frequency	Asset / (Liability)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2020
Cross-currency swaps	Recurring	$	(5,000)	$	—	$	(5,000)	$	—
Foreign exchange contracts	Recurring	$	140	$	—	$	140	$	—
December 31, 2019
Cross-currency swaps	Recurring	$	4,460	$	—	$	4,460	$	—
Foreign exchange contracts	Recurring	$	(770)	$	—	$	(770)	$	—