v3.26.1
DERIVATIVE INSTRUMENTS
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS DERIVATIVE INSTRUMENTS
Interest Rate Hedging
The Company’s interest rate risk relates to U.S. dollar denominated variable interest rate borrowings. The Company uses interest rate swap derivative instruments to manage earnings and cash flow exposure resulting from changes in interest rates. These interest rate swaps apply a fixed interest rate on a portion of the Company’s expected SOFR-indexed borrowings. Additionally, the Company entered into a basis swap where the Company receives Term SOFR and pays daily compounded SOFR to convert the portfolio of swaps from daily compounded SOFR to Term SOFR.
The Company held the following interest rate swaps as of March 31, 2026 and December 31, 2025 (dollar amounts in thousands):
March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Hedged ItemNotional AmountEffective DateTermination DateFixed Interest RateEstimated Fair Value
Asset (Liability)
1-month Term SOFR Loan100,000 100,000 December 30, 2022December 31, 20272.885 %1,380 950 
1-month Term SOFR Loan100,000 100,000 December 30, 2022December 31, 20272.867 %1,444 1,006 
1-month Term SOFR Loan575,000 575,000 July 31, 2025December 31, 20271.415 %22,757 22,094 
1-month Term SOFR Loan125,000 125,000 July 1, 2025December 31, 20271.404 %4,970 4,825 
Basis Swap (1)
— — March 24, 2023December 31, 2027N/A(1,425)(1,629)
$900,000 $900,000 $29,126 $27,246 
(1) The notional of the basis swap amortizes to match the total notional of the interest rate swap portfolio over time
The interest rate swaps are carried on the consolidated balance sheet at fair value and changes in the fair values were recorded as unrealized gains or losses in accumulated other comprehensive income (“AOCI”). Related gain/loss amounts recognized in AOCI and earnings are presented in the Effects of Derivative Instruments table below. The estimated gain that is expected to be reclassified to interest income from AOCI as of March 31, 2026 within the next twelve months is $17.4 million.
The Company has designated these derivative instruments as cash flow hedges. The Company assesses the effectiveness of these derivative instruments and has recorded the changes in the fair value of the derivative instrument designated as a cash flow hedge as unrealized gains or losses in AOCI, net of tax, until the hedged item affected earnings, at which point any gain or loss was reclassified to earnings. If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the remaining amount of any gain or loss on the related cash flow hedge recorded in AOCI to interest expense at that time.
Foreign Currency Hedging
From time to time, the Company enters into foreign currency hedge contracts intended to protect the U.S. dollar value of certain forecasted foreign currency denominated transactions. The Company assesses the effectiveness of the contracts that are designated as hedging instruments. The changes in fair value of foreign currency cash flow hedges are recorded in AOCI, net of tax. Those amounts are subsequently reclassified to earnings from AOCI as impacted by the hedged item when the hedged item affects earnings. If the hedged forecasted transaction does not occur or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. For contracts not designated as hedging instruments, the changes in fair value of the contracts are recognized in other income, net in the consolidated statements of operation, along with the offsetting foreign currency gain or loss on the underlying assets or liabilities.
The success of the Company’s hedging anticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activities during periods of currency volatility. In addition, changes in currency exchange rates related to any unhedged transactions may affect earnings and cash flows.
Cross-Currency Rate Swaps
The objective of these cross-currency swaps is to reduce volatility of earnings and cash flows associated with changes in the foreign currency exchange rate. Under the terms of these contracts, which have been designated as cash flow hedges, the Company will make interest payments in Swiss francs (“CHFs”) and receive interest in U.S. dollars. Upon the maturity of these contracts, the Company will pay the principal amount of the loans in CHFs and receive U.S. dollars from the counterparties.
In December 2020, the Company entered into cross-currency swap agreements to convert a notional amount of $471.6 million equivalent to 420.1 million of a CHF-denominated intercompany loan into U.S. dollars. The CHF-denominated intercompany loan was the result of an intra-entity transfer of certain intellectual property rights to a subsidiary in Switzerland completed during the fourth quarter of 2020. The intercompany loan requires quarterly principal payments of CHF 5.8 million plus accrued interest. As a result, the aggregate notional amount of the related cross-currency swaps will decrease by a corresponding amount. In February 2025, the Company amended the CHF-denominated intercompany loan to extend the maturity to December 2030. Concurrently, the Company amended the cross-currency swap agreement, with a notional amount of $368.4 million, equivalent to CHF 328.1 million, to extend the maturity to December 2030.
In November 2025, the Company entered into cross-currency swap agreements to convert an aggregate notional amount of $170.0 million equivalent to 137.6 million of two CHF-denominated intercompany loans into U.S. dollars. The CHF-denominated intercompany loans were the result of an intra-entity transfer of certain intellectual property rights to a subsidiary in Switzerland completed during the fourth quarter of 2025. The intercompany loan of CHF 80.9 million which matures in September 2028 requires quarterly interest payments and annual principal payments of CHF 8.1 million in September 2026 and September 2027; the intercompany loan of CHF 56.6 million which matures in September 2030 requires quarterly interest payments and a principal payment of CHF 8.1 million in September 2029. As the principal outstanding decreases on the intercompany loans, the aggregate notional amount of the related cross-currency swaps will decrease by a corresponding amount.
The Company held the following cross-currency rate swaps as of March 31, 2026 and December 31, 2025 (dollar amounts in thousands):
March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Effective DateTermination DateFixed RateAggregate Notional AmountFair Value
Asset (Liability)
Pay CHFFebruary 20, 2025December 20, 20303.25%299,387 305,137 (50,500)(54,149)
Receive U.S.$6.14%336,088 342,543 
Pay CHFNovember 10, 2025September 30, 20304.00%56,644 56,644 (2,581)(2,684)
Receive U.S.$7.11%70,000 70,000 
Pay CHFNovember 10, 2025September 29, 20283.00%80,920 80,920 $(1,969)$(2,834)
Receive U.S.$6.23%100,000 100,000 
Total$(55,050)$(59,667)
The cross-currency swaps designated as cash flow hedges are carried on the consolidated balance sheet at fair value, and changes in the fair values were recorded as unrealized gains or losses in AOCI. Related gain/loss amounts recognized in AOCI and earnings are presented in the Effects of Derivative Instruments table below. The estimated gain that is expected to be reclassified to other income (expense), net from AOCI as of March 31, 2026 within the next twelve months is $10.0 million.
For the three months ended March 31, 2026 and 2025, the Company recorded a gain of $5.9 million and a loss of $(9.4) million, respectively, in other income, net related to change in fair value related to the foreign currency rate translation to offset the gains and losses, respectively, recognized on the intercompany loans.
For the three months ended March 31, 2026 and 2025, the Company recorded gains of $3.5 million and $1.2 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.
Net Investment Hedges
The Company manages certain foreign exchange risks through a variety of strategies, including hedging. The Company is exposed to foreign exchange risk from its international operations through foreign currency purchases, net investments in foreign subsidiaries, and foreign currency assets and liabilities created in the normal course of business.
In February 2025, the Company entered into a cross-currency swap agreement with a notional amount of CHF 67.8 million equivalent to $75.0 million, where the Company agreed with third-parties to sell CHF in exchange for U.S. dollars at a specified rate at the maturity of the contract. The new cross-currency swap agreement was designated as a net investment hedge to partially offset the effects of foreign currency on foreign subsidiaries.
On July 25, 2025, the Company entered into a cross-currency swap agreement with a notional amount of CHF 59.7 million, equivalent to $75.0 million, where the Company agreed with third-parties to sell CHF in exchange for U.S. dollars at a specified rate at the maturity of the contract. The new cross-currency swap agreement was designated as a net investment hedge to partially offset the effects of foreign currency on foreign subsidiaries.
The Company held the following cross-currency rate swaps designated as net investment hedges as of March 31, 2026 and December 31, 2025, respectively (dollar amounts in thousands):
March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Effective DateTermination DateFixed RateAggregate Notional AmountFair Value
Asset (Liability)
Pay CHFMay 26, 2022December 16, 2028—%CHF192,140 192,140 (44,759)(47,619)
Receive U.S.$1.94%$200,000 200,000 
Pay CHFNovember 17, 2023December 17, 2029—%CHF66,525 66,525 (9,762)(10,568)
Receive U.S.$2.54%$75,000 75,000 
Pay CHFMay 6, 2024December 18, 2030—%CHF68,483 68,483 (12,051)(12,407)
Receive U.S.$2.74%$75,000 75,000 
Pay CHFFebruary 21, 2025December 15, 2031—%CHF67,800 67,800 (9,308)(9,394)
Receive U.S.$3.24%$75,000 75,000 
Pay CHFJuly 25, 2025December 15, 2032—%CHF59,693 59,693 (2,187)(2,211)
Receive U.S.$2.66%$75,000 75,000 
Total$(78,067)$(82,199)
The net investment hedges are carried on the consolidated balance sheet at fair value and changes in the fair values were recorded as unrealized gains or losses in AOCI. Related gain/loss amounts recognized in AOCI and earnings are presented in the Effects of Derivative Instruments table below. The estimated gain that is expected to be reclassified to interest income from AOCI as of March 31, 2026 within the next twelve months is $11.1 million.
Foreign Currency Forward Contracts
The Company has entered into forward contracts designated as cash flow hedges for forecasted purchases in foreign currencies, primarily CHF-denominated intercompany purchases. These contracts typically settle at various dates within twelve months of execution. As of March 31, 2026, the notional amount of foreign currency forward contracts was CHF 14.1 million. The foreign currency forward contracts are carried on the consolidated balance sheet at fair value and changes in the fair values were recorded as unrealized gains or losses in AOCI. The changes in fair value will be recognized into earnings as a component of cost of sales when the forecasted-transaction occurs.
For the three months ended March 31, 2026 and 2025, amounts reclassified to earnings included (i) the effective hedge component amounts of $0.5 million and $0.2 million, respectively, within cost of goods sold, and (ii) forward‑points amortization of $(0.1) million and $(0.2) million, respectively, within other income (expense), net. Related gain/loss amounts recognized in AOCI and earnings are presented in the Effects of Derivative Instruments table below.
On April 28, 2026, the Company entered into foreign currency forwards with a notional amount of CHF 3.1 million to be designated as a cash flow hedge to mitigate the exchange rate risk of CHF-denominated intercompany purchases. These contracts settle at various dates within twelve months of execution.
Counterparty Credit Risk
The Company manages its concentration of counterparty credit risk on its derivative instruments by limiting acceptable counterparties to a group of major financial institutions with investment grade credit ratings, and by actively monitoring their credit ratings and outstanding positions on an ongoing basis. Therefore, the Company considers the credit risk of the counterparties to be low. Furthermore, none of the Company’s derivative transactions are subject to collateral or other security arrangements, and none contain provisions that depend upon the Company’s credit ratings from any credit rating agency.
Fair Value of Derivative Instruments
The Company has classified all of its derivative instruments within Level 2 of the fair value hierarchy because observable inputs are available for the derivative instruments. The fair values of the interest rate swaps and cross-currency swaps were developed using a market approach based on publicly available market yield curves and the terms of the swap. The Company performs ongoing assessments of counterparty credit risk.
The following table summarizes the fair value for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025:
Fair Value as of
Location on Balance Sheet (1):
March 31, 2026December 31, 2025
Dollars in thousands
Derivatives designated as hedges — Assets:
Prepaid expenses and other current assets
Cash Flow Hedges
Interest rate swap
$18,401 $16,126 
Cross-currency swap8,343 8,325 
Foreign currency forward contracts— 29 
Net Investment Hedges
Cross-currency swap7,494 7,474 
Other assets
Cash Flow Hedges
Interest rate swap12,151 12,749 
Total derivatives designated as hedges — Assets$46,389 $44,703 
Derivatives designated as hedges — Liabilities:
Accrued expenses and other current liabilities
Cash Flow Hedges
Interest rate swap$1,040 $1,103 
Foreign currency forward contracts614 — 
Net Investment Hedges
Cross-currency swap8,072 8,798 
Other liabilities
Cash Flow Hedges
Interest rate swap386 526 
Cross-currency swap63,393 67,992 
Net Investment Hedges
Cross-currency swap77,489 80,875 
Total derivatives designated as hedges — Liabilities$150,994 $159,294 
(1) The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months.
Effects of Derivative Instruments
The following presents the effect of derivative instruments designated as cash flow hedges and net investment hedges on the accompanying condensed consolidated statement of operations during the three months ended March 31, 2026 and 2025:
Dollars in thousandsBalance in AOCI
Beginning of
Quarter		Amount of
Gain (Loss)
Recognized in
AOCI		Amount of Gain (Loss)
Reclassified from
AOCI into
Earnings		Balance in AOCI
End of Quarter		Location in
Statements of
Operations
Three Months Ended March 31, 2026
Cash Flow Hedges
Interest rate swap$27,247 $6,261 $4,380 $29,128 Interest expense
Cross-currency swap(6,583)7,364 8,668 (7,887)Other income, net
Foreign Currency Forward Contract727 (439)410 (122)Cost of sales
Net Investment Hedges
Cross-currency swap(93,141)7,213 3,080 (89,008)Interest income
$(71,750)$20,399 $16,538 $(67,889)
Three Months Ended March 31, 2025
Cash Flow Hedges
Interest rate swap$48,794 $(7,463)$1,426 $39,905 Interest expense
Cross-currency swap(11,621)(10,032)(8,230)(13,423)Other income, net
Foreign Currency Forward Contract$(624)$436 $23 $(211)
Net Investment Hedges
Cross-currency swap(31,130)(3,435)2,633 (37,198)Interest income
$5,419 $(20,494)$(4,148)$(10,927)
Derivative Instruments not Designated Hedges
From time to time, the Company enters into foreign currency forward contracts to mitigate risk from the fluctuations in foreign currency exchange rates associated with intercompany balances in Chinese yuan (“CNH”) CHF, and EUR. These contracts typically settle at various dates within twelve months of execution. As of March 31, 2026, the notional amounts totaled CNH 30.0 million, CHF 4.0 million, and EUR 7.0 million equivalent to $4.4 million, $5.1 million, and $8.2 million, respectively.
In 2021, the Company entered into a foreign currency swap, with a notional amount of JPY 800.0 million, equivalent to $7.3 million, to mitigate the risk from fluctuations in foreign currency exchange rates associated with an intercompany loan denominated in Japanese yen. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another currency at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company subsequently paid down a portion of this swap, bringing the notional amount down to JPY 400.0 million, equivalent to $3.6 million as of March 31, 2026.
The fair value of the foreign currency swaps not designated as hedges was $1.3 million and $1.0 million as of March 31, 2026 and December 31, 2025, respectively.
The following table summarizes the gains and losses on derivative instruments not designated as hedges on the condensed consolidated statements of income, which was included in other income:
Dollars in thousandsThree Months Ended March 31,
20262025
Foreign currency forward contracts(222)174 
Foreign currency swaps(54)$169 
Total$(276)$343