DERIVATIVES AND HEDGING

9 Months Ended

Sep. 30, 2025

DERIVATIVES AND HEDGING

DERIVATIVES AND HEDGING

NOTE 6 – DERIVATIVES AND HEDGING

The following table summarizes the gross notional amount and fair value of outstanding derivative instruments at September 30, 2025 and December 31, 2024.

			September 30, 2025
	Balance Sheet Location		Notional Amount		Fair Value
Derivative assets designated as hedge accounting instruments:
Interest rate floors		Other Current Assets		Note 1	$	1,291
Foreign currency forwards		Other Current Assets	$	65,229		2,915
Foreign currency net purchased options		Other Current Assets		8,012		857
Total current derivative assets			$	73,241	$	5,063
Interest rate floors		Other Non-Current Assets		Note 1		17,306
Total derivative assets			$	73,241	$	22,369

			December 31, 2024
	Balance Sheet Location		Notional Amount		Fair Value
Derivative assets designated as hedge accounting instruments:
Interest rate floors		Other Current Assets		Note 1	$	739
Foreign currency forwards		Other Current Assets	$	40,330		910
Foreign currency net purchased options		Other Current Assets		15,966		385
Total current derivative assets			$	56,296	$	2,034
Interest rate floors		Other Non-Current Assets		Note 1	$	17,692
Total derivative assets			$	56,296	$	19,726

Note 1: The Company’s investment in interest rate derivative instruments consists of three and five year investments in 3% interest rate floors to hedge interest income on a $1,900,000 notional investment of customer funds in floating rate cash equivalent instruments. The short-term portion of the investments’ fair value shown in the tables above relates to the portion of the hedge expiring within one year of the balance sheet date.

During the three months ended September 30, 2025 and 2024, the Company recognized $(6,162) in unrealized losses, net of tax and $793, in unrealized gains, net of tax, on derivative instruments designated as cash flow hedges in OCI, respectively. During the nine months ended September 30, 2025 and 2024, the Company recognized $3,568 and $20, respectively, in unrealized gains, net of tax, on derivative instruments designated as cash flow hedges in OCI, respectively.

As of September 30, 2025, the Company estimated that $6,717 of unrealized losses related to interest rate floor cash flow hedges currently included in AOCI are expected to be reclassified into earnings within the next 12 months. As of September 30, 2025, the Company estimated that $3,772 of unrealized gains related to foreign currency cash flow hedges currently included in AOCI are expected to be reclassified into operating expenses within the next 12 months. As of September 30, 2025, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for forecasted transactions is 49 months. During the three and nine months ended September 30, 2025 and 2024, the Company did not discontinue any cash flow hedges because it was probable that the original forecasted transaction would not occur and as such, did not reclassify any gains or losses to earnings prior to the occurrence of the hedged transaction.

As of September 30, 2025 and December 31, 2024, the Company recognized an obligation to return cash collateral related to interest rate floors of $18,330 and $18,790, respectively, which was offset against the gross derivative balances shown in the table above.