v3.26.1
Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
The Company principally uses derivative financial instruments to reduce the impact of foreign currency fluctuations on the Company's results of operations. The principal derivative financial instruments the Company enters into are foreign exchange forward contracts. The Company does not enter into derivative financial instrument contracts for trading or speculative purposes.
Foreign Exchange Derivative Instruments
Foreign exchange forward contracts are foreign exchange derivative instruments primarily used to reduce foreign currency risk related to transactions denominated in a currency other than functional currency. These instruments are designated as cash flow hedges. The periods of the foreign exchange forward contracts correspond to the periods of the hedged forecasted transactions, which do not exceed 24 months subsequent to the latest balance sheet date. The primary foreign exchange forward contracts pertain to the U.S. dollar, the Japanese yen, the British pound sterling, the Canadian dollar, the Korean won, the Australian dollar and the euro. The gross U.S. dollar equivalent notional amount outstanding of all foreign exchange forward contracts designated under hedge accounting as of June 30, 2026 and December 31, 2025 was $216.3 million and $230.7 million, respectively.
Impact on Financial Statements
The fair value of hedge instruments recognized on the unaudited condensed consolidated balance sheets was as follows:
(in thousands)June 30,December 31,
Balance Sheet LocationHedge Instrument Type20262025
Prepaid and other current assetsForeign exchange forward$6,433 $2,950 
Accrued expenses and other current liabilitiesForeign exchange forward502 1,746 
The hedge instrument gains (losses) recognized in accumulated other comprehensive loss, net of tax was as follows:
Three months endedSix months ended
June 30,June 30,
(in thousands)2026202520262025
Type of hedge
Foreign exchange forward$3,504 $(5,173)$6,183 $(7,333)
 Total$3,504 $(5,173)$6,183 $(7,333)
Gains and losses on derivative instruments designated as cash flow hedges are reclassified from accumulated other comprehensive loss, net of tax at the time the forecasted hedged transaction impacts the statements of operations or at the time the hedge is determined to be ineffective. Based on the current valuation, during the next 12 months the Company expects to reclassify a net gain of $5.7 million related to foreign exchange derivative instruments from accumulated other comprehensive loss, net of tax, into cost of goods sold. For further information related to amounts recognized in accumulated other comprehensive loss, net of tax, see Note 12.
The hedge instrument gains recognized on the unaudited condensed consolidated statements of operations were as follows:
Three months endedSix months ended
June 30,June 30,
(in thousands)2026202520262025
Location of gains (losses) in statements of operations
Foreign exchange forward:
Cost of goods sold$1,339 $2,704 $841 $3,115 
Selling, general and administrative (1)
309 (2,143)1,125 (3,103)
Total $1,648 $561 $1,966 $12 
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(1) Relates to net gains (losses) on foreign exchange forward contracts derived from previously designated cash flow hedges.
Credit Risk
The Company enters into derivative contracts with major financial institutions with investment grade credit ratings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit risk is generally limited to the unrealized gains in the derivative contracts. However, the Company monitors the credit quality of these financial institutions, as well as its own credit quality, and considers the risk of counterparty default to be minimal.