Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Gross Fair Value of Our Derivative Financial Instruments

The following table presents the gross fair value of our derivative financial instruments as of September 30, 2023 and December 31, 2022 (in thousands):


	Derivative Assets				Derivative Liabilities
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Derivatives designated as hedging instruments under ASC 815:
Interest rate collars (1)	$	—	$	—	$	17,235	$	—

Total derivatives designated as hedging instruments under ASC 815	—		—		17,235		—

Derivatives not designated as hedging instruments under ASC 815:

Interest rate caps (1)	—		—		637		—
Total derivatives not designated as hedging instruments under ASC 815	—		—		637		—
Total derivatives	$	—	$	—	$	17,872	$	—

______________________ (1)As of September 30, 2023, approximately $7.6 million of the fair value of these derivative financial instruments was recorded within “Accrued expenses and other current liabilities,” with the remaining balance recorded within “Other long-term liabilities” on the condensed consolidated balance sheets.

Schedule of Gains and Losses Related to Derivative Financial Instruments and their Location

The table below presents the amount of gains and losses related to these derivative financial instruments and their location in the condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Gain (Loss) Recognized in OCI					Gain (Loss) Recognized in Income
Three Months Ended	September 30, 2023		September 30, 2022		Location of Gain (Loss) Recognized in Income	September 30, 2023		September 30, 2022
Interest rate collars, net of tax	$	(1,957)	$	—	Revenue	$	(975)	$	—

Nine Months Ended
Interest rate collars, net of tax	$	(14,350)	$	—	Revenue	$	(1,307)	$	—


		Gain (Loss) Recognized in Income
Three Months Ended	Location of Gain (Loss) Recognized in Income	September 30, 2023		September 30, 2022
Interest rate caps	Interest expense and other, net	$	336	$	—

Nine Months Ended
Interest rate caps	Interest expense and other, net	$	(506)	$	—

Schedule of Accumulated Other Comprehensive Income (Loss)

The table below presents a roll forward of the amounts included in accumulated other comprehensive income (loss), net of taxes, for the three and nine months ended September 30, 2023 (in thousands):


	Interest Rate Collars		Deferred Taxes		Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2022	$	—	$	—	$	—

Balance as of March 31, 2023	—		—		—
Changes in fair value	(16,377)		3,984		(12,393)
Reclassification to earnings	439		(107)		332
Balance as of June 30, 2023	(15,938)		3,877		(12,061)
Changes in fair value	(2,585)		628		(1,957)
Reclassification to earnings	1,288		(313)		975
Balance as of September 30, 2023	$	(17,235)	$	4,192	$	(13,043)

AVANTAX, INC. 10-Q