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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 12 Months Ended
Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We maintain a foreign exchange risk management policy designed to establish a framework to protect the value of our non-functional currency denominated transactions from adverse changes in exchange rates. Sales of our products can be denominated in a currency different from the currency in which the related costs to produce the product are denominated. Changes in exchange rates on such inter-country sales or intercompany loans can impact our results of operations. Our policy is not to engage in speculative foreign currency hedging activities, but to minimize our net foreign currency transaction exposure defined as firm commitments and transactions recorded and denominated in currencies other than the functional currency. We may use foreign currency forward exchange contracts, options and cross currency swaps to economically hedge these risks.
For derivative instruments designated as hedges, we formally document the nature and relationships between the hedging instruments and the hedged items, as well as the risk management objectives, strategies for undertaking the various hedge transactions, and the method of assessing hedge effectiveness at inception. Quarterly thereafter, we formally assess whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair value or cash flows of the hedged item. Additionally, in order to designate any derivative instrument as a hedge of an anticipated transaction, the significant characteristics and expected terms of any anticipated transaction must be specifically identified, and it must be probable that the anticipated transaction will occur. All derivative financial instruments used as hedges are recorded at fair value in the Consolidated Balance Sheets (See Note 12 – Fair Value).
Cash Flow Hedge
For derivative instruments that are designated and qualify as cash flow hedges, the changes in fair values are recorded in accumulated other comprehensive loss and included in changes in derivative gain/loss. The changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive loss to net income when the underlying hedged item is recognized in earnings. Cash flows from the settlement of derivative contracts designated as cash flow hedges offset cash flows from the underlying hedged items and are included in operating activities in the Consolidated Statements of Cash Flows.
In 2017 our wholly owned UK subsidiary borrowed $280 million in term loan borrowings under our prior credit facility. In order to mitigate the currency risk of U.S. dollar debt on a euro functional currency entity and to mitigate the risk of variability in interest rates, we entered into a EUR/USD floating-to-fixed cross currency swap on July 20, 2017 in the notional amount of $280 million to effectively hedge the foreign exchange and interest rate exposure on the $280 million term loan. Related to this hedge, approximately $0.1 million and $1.4 million, respectively, of net after-tax loss is included in accumulated other comprehensive loss at December 31, 2021 and 2020. The amount expected to be recognized into earnings during the next 7 months related to the interest component of our cross currency swap, based on prevailing foreign exchange and interest rates at December 31, 2021, is a gain of $29 thousand. The amount expected to be recognized into earnings during the next 7 months related to the foreign exchange component of our cross currency swap is dependent on fluctuations in currency exchange rates. As of December 31, 2021, the fair value of the cross currency swap was a $0.5 million asset. The swap contract expires on July 20, 2022.
Hedge of Net Investments in Foreign Operations
A significant number of our operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of our foreign entities. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial condition and results of operations. Conversely, a strengthening U.S. dollar has a dilutive effect. In some cases we maintain debt in these subsidiaries to offset the net asset exposure. We do not otherwise actively manage this risk using derivative financial instruments. In the event we plan on a full or partial liquidation of any of our foreign subsidiaries where our net investment is likely to be monetized, we will consider hedging the currency exposure associated with such a transaction.
Other
As of December 31, 2021, we have recorded the fair value of foreign currency forward exchange contracts of $0.3 million in prepaid and other and $0.2 million in accounts payable, accrued and other liabilities in the balance sheet. All forward exchange contracts outstanding as of December 31, 2021 had an aggregate notional contract amount of $49.4 million.
Fair Value of Derivative Instruments in the Consolidated Balance Sheets as of
December 31, 2021 and December 31, 2020
December 31, 2021December 31, 2020
Balance Sheet
Location		Derivatives
Designated
as Hedging
Instruments		Derivatives
not
Designated
as Hedging
Instruments		Derivatives
Designated
as Hedging
Instruments		Derivatives
not
Designated
as Hedging
Instruments
Derivative Assets
Foreign Exchange ContractsPrepaid and other$— $331 $— $322 
Cross Currency Swap Contract (1)Prepaid and other511 — — — 
$511 $331 $— $322 
Derivative Liabilities
Foreign Exchange ContractsAccounts payable, accrued and other liabilities$— $221 $— $146 
Cross Currency Swap Contract (1)Accounts payable, accrued and other liabilities— — 8,309 — 
$— $221 $8,309 $146 
(1)This cross currency swap contract is composed of both an interest component and a foreign exchange component.
The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) for the
Fiscal Years Ended December 31, 2021 and December 31, 2020
Derivatives in Cash
Flow Hedging
Relationships		Amount of Gain (Loss)
Recognized in
Other Comprehensive
Income on Derivative		Location of (Loss)
Gain Recognized
in Income on
Derivatives		Amount of Gain (Loss)
Reclassified from
Accumulated
Other Comprehensive
Income on Derivative		Total Amount
of Affected
Income
Statement
Line Item
2021202020212020
Cross currency swap contract:
Interest component$1,319 $1,789 Interest expense$13 $1,474 $(30,284)
Foreign exchange component7,265 (10,961)Miscellaneous, net7,264 (10,961)(3,094)
$8,584 $(9,172)$7,277 $(9,487)
The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Income for the Fiscal Years Ended December 31, 2021 and December 31, 2020
Derivatives Not Designated
as Hedging Instruments		Location of (Loss) Gain Recognized
in Income on Derivatives		Amount of (Loss) Gain
Recognized in Income
on Derivatives
20212020
Foreign Exchange ContractsOther (Expense) Income:
Miscellaneous, net		$(87)$337 
$(87)$337 
Gross Amounts
Offset in the
Statement of
Financial Position		Net Amounts
Presented in
the Statement of
Financial Position		Gross Amounts not Offset
in the Statement of
Financial Position
Gross
Amount		Financial
Instruments		Cash Collateral
Received		Net
Amount
Description
December 31, 2021
Derivative Assets$842 $— $842 $— $— $842 
Total Assets$842 $— $842 $— $— $842 
Derivative Liabilities$221 $— $221 $— $— $221 
Total Liabilities$221 $— $221 $— $— $221 
December 31, 2020
Derivative Assets$322 $— $322 $— $— $322 
Total Assets$322 $— $322 $— $— $322 
Derivative Liabilities$8,455 $— $8,455 $— $— $8,455 
Total Liabilities$8,455 $— $8,455 $— $— $8,455