Note 9 - Derivative Instruments and Hedging Activities |
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| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Text Block] |
Our primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk and interest rate risk, when deemed appropriate. We enter into these contracts in the normal course of business to mitigate risks and generally not for speculative purposes.
Foreign Currency Forward Contracts
Under our risk management strategy, we periodically use foreign currency forward contracts to manage our short-term exposures to fluctuations in operational cash flows resulting from changes in foreign currency exchange rates. These cash flow exposures result from portions of our forecasted operating expenses, primarily compensation and related expenses, which are transacted in currencies other than the U.S. dollar, most notably the Chinese renminbi, Mexican peso and Israeli shekel. These foreign currency forward contracts generally have maturities of no longer than twelve months, although occasionally we will execute a contract that extends beyond twelve months, depending upon the nature of the underlying risk.
We held outstanding foreign currency forward contracts with notional amounts of $52.0 million and $49.6 million as of September 30, 2026 and December 31, 2025, respectively. The Company's foreign currency forward contracts related to the Chinese renminbi are designated as cash flow hedges for accounting purposes and as such, changes in their fair value are recognized in accumulated other comprehensive loss in the consolidated balance sheet and are reclassified into the statement of operations within cost of goods sold in the period in which the hedged transaction affects earnings. Foreign currency forward contracts related to the Israeli shekel and Mexican peso are not designated as hedging instruments, and changes in their fair value are recognized in earnings within other income, net.
Interest Rate Swap Agreements
The Company previously maintained interest rate swap agreements with an aggregate notional amount of $60.0 million to partially mitigate exposure to variable interest rates on borrowings under its Credit Agreement. The swaps were designated as cash flow hedges for accounting purposes and were terminated effective August 31, 2026. The Company had no outstanding interest rate swap agreements as of September 30, 2026, and no amounts related to the terminated swaps remained in accumulated other comprehensive income (loss).
Fair Values of Derivative Financial Instruments
See Note 5, "Fair Value Measurements" for the gross fair values of the Company's derivative assets and liabilities as of September 30, 2026 and December 31, 2025.
Derivative Financial Instruments in Cash Flow Hedging Relationships
The effects of derivative financial instruments designated as cash flow hedges on accumulated other comprehensive loss (“AOCL”) and on the condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025 were as follows:
The gains and losses related to the foreign currency forward contracts are included as a component of currency translation adjustment on the accompanying condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2026 and 2025.
Derivative Financial Instruments Not Designated as Hedging Instruments
Gains (losses) recognized on derivative financial instruments not designated as hedging instruments in our condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025 were as follows:
During the third quarter of 2026, the Company recorded an out-of-period benefit within other income (expense), net of approximately $3.7 million, related to previously recorded foreign currency gains and losses. The Company concluded that the adjustment was not material to the current-period financial statements or any previously issued financial statements. |
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