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Financial Instruments and Derivatives | 3 Months Ended
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Mar. 29, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments and Derivatives | Financial Instruments and Derivatives The following table sets forth the carrying amounts and fair values of the Company’s significant financial instruments for which the carrying amount differs from the fair value.
|  | March 29, 2020 |  |  |  | December 31, 2019 |  |
|  | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Long-term debt, net of current portion |  | $ | 1,187,904 |  |  | $ | 1,294,469 |  |  | $ | 1,193,135 |  |  | $ | 1,351,397 |
The carrying value of cash and cash equivalents, short-term debt and long-term variable-rate debt approximates fair value. The fair value of long-term debt is determined based on recent trade information in the financial markets of the Company’s public debt or is determined by discounting future cash flows using interest rates available to the Company for issues with similar terms and maturities. It is considered a Level 2 fair value measurement. Cash Flow Hedges At March 29, 2020 and December 31, 2019, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows. These contracts, which have maturities ranging to December 2020, qualify as cash flow hedges under U.S. GAAP. For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item. Commodity Cash Flow Hedges The Company has entered into certain derivative contracts to manage the cost of anticipated purchases of natural gas and aluminum. At March 29, 2020, natural gas swaps covering approximately 4.0 million MMBTUs were outstanding. These contracts represent approximately 65% of anticipated usage in the United States, Canada, and Mexico for the remainder of 2020. Additionally, the Company had swap contracts covering 1,089 metric tons of aluminum, representing approximately 23% o f anticipated usage for the remainder of 2020. The fair values of the Company’s commodity cash flow hedges netted to a loss position of $(2,900) and $(1,625) at March 29, 2020 and December 31, 2019 respectively. The amount of the loss included in Accumulated Other Comprehensive Loss at March 29, 2020, that is expected to be reclassified to the income statement during the next twelve months is $(2,543). Foreign Currency Cash Flow Hedges The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales, purchases, and capital spending expected to occur in 2020. The net positions of these contracts at March 29, 2020 were as follows (in thousands):
Currency | Action | Quantity
Colombian peso | purchase | 11,703,686 |
Mexican peso | purchase |  | 250,095 |
Polish zloty | purchase | 66,513 |
Czech koruna | purchase | 30,328 |
Canadian dollar | purchase |  | 15,566 |
British pound | purchase | 4,834 |
Turkish lira | purchase |  | 2,411 |
Swedish krona | sell |  | (2,898) |
Euro | sell | (21,170) |
Russian ruble | sell |  | (142,632) |
The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a loss position of $(3,609) at March 29, 2020 and a gain position of $1,058 at December 31, 2019. Losses of $(3,609) are expected to be reclassified from accumulated other comprehensive income to the income statement during the next twelve months. I n addition, the Company occasionally enters into forward contracts to hedge certain foreign currency cash flow transactions related to construction in progress. Gains or losses from these hedges are reclassified from accumulated other comprehensive income and included in the carrying value of the related fixed assets acquired. The net positions of these contracts were immaterial as of March 29, 2020 and December 31, 2019. Net Investment Hedge In January 2020, the Company entered into a cross-currency swap agreement with a notional amount of $250,000 to effectively convert a portion of the Company's fixed-rate, U.S. dollar denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt. The swap agreement had an original maturity of November 1, 2024 and provided for the Company to receive semi-annual interest payments in U.S. dollars at a rate of 5.75% and pay interest in euros at a rate of 3.856%. The risk management objective was to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in foreign currencies. As a result of significant strengthening of the U.S. dollar, as well as a reduction in the differential between U.S. and European interest rates, the fair market value of the swap position appreciated significantly during the first quarter of 2020. In March 2020, the Company terminated the swap agreement and received a net cash settlement of $14,480. The Company recorded this foreign currency translation gain in "Accumulated other comprehensive loss," net of a tax provision of $7,581. Other Derivatives The Company routinely enters into forward contracts or swaps to economically hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables. The Company does not apply hedge accounting treatment under ASC 815 for these instruments. As such, changes in fair value are recorded directly to income and expense in the periods that they occur. The net positions of these contracts at March 29, 2020, were as follows (in thousands):
Currency | Action | Quantity
Colombian peso | purchase | 12,808,000 |
Mexican peso | purchase | 460,090 |
Canadian dollar | purchase | 6,199 |
Indonesian rupiah | sell | (29,085) |
The fair value of the Company’s other derivatives position was a loss of $(145) and a gain of $54 at March 29, 2020 and December 31, 2019, respectively. The following table sets forth the location and fair values of the Company’s derivative instruments at March 29, 2020 and December 31, 2019:
Description |  | Balance Sheet Location |  | March 29, 2020 |  | December 31, 2019
Derivatives designated as hedging instruments: |  |  |  |  |  |
Commodity Contracts |  | Accrued expenses and other |  | $ | (2,900) |  |  | $ | (1,625) |
Foreign Exchange Contracts |  | Prepaid expenses |  | $ | 366 |  |  | $ | 1,236 |
Foreign Exchange Contracts |  | Accrued expenses and other |  | $ | (3,976) |  |  | $ | (178) |
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Foreign Exchange Contracts |  | Prepaid expenses |  | $ | 124 |  |  | $ | 88 |
Foreign Exchange Contracts |  | Accrued expenses and other |  | $ | (269) |  |  | $ | (34) |
While certain of the Company’s derivative contract arrangements with its counterparties provide for the ability to settle contracts on a net basis, the Company reports its derivative positions on a gross basis. There are no collateral arrangements or requirements in these agreements. The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three months ended March 29, 2020 and March 31, 2019:
Description |  | Amount of Gain or (Loss) Recognized in OCI on Derivatives |  | Location of Gain or (Loss) Reclassified from Accumulated OCI Into Income |  | Amount of Gain or (Loss) Reclassified from Accumulated OCI Into Income |  |  |  |
Derivatives in Cash Flow Hedging Relationships: |  |  |  |  |  |  |  |  |  |
Three months ended March 29, 2020 |  |  |  |  |  |  |  |  |  |
Foreign Exchange Contracts |  | $ | (4,978) |  |  | Net sales |  | $ | (1,138) |  |  |  |  |
|  |  |  | Cost of sales |  | $ | 827 |  |  |  |  |
Commodity Contracts |  | $ | (2,355) |  |  | Cost of sales |  | $ | (1,079) |  |  |  |  |
Three months ended March 31, 2019 |  |  |  |  |  |  |  |  |  |
Foreign Exchange Contracts |  | $ | 1,930 |  |  | Net sales |  | $ | 317 |  |  |  |  |
|  |  |  | Cost of sales |  | $ | (288) |  |  |  |  |
Commodity Contracts |  | $ | 1,092 |  |  | Cost of sales |  | $ | 435 |  |  |  |  |
Description |  | Gain or (Loss) Recognized |  | Location of Gain or (Loss) Recognized in Income Statement
Derivatives not Designated as Hedging Instruments: |  |  |  |
Three months ended March 29, 2020 |  |  |  |
Foreign Exchange Contracts |  | $ | — |  |  | Cost of sales
|  | $ | (4,917) |  |  | Selling, general and administrative
Three months ended March 31, 2019 |  |  |  |
Foreign Exchange Contracts |  | $ | — |  |  | Cost of sales
|  | $ | (1,465) |  |  | Selling, general and administrative
|  | Three months ended March 29, 2020 |  |  | Three months ended March 31, 2019 |
Description |  | Revenue | Cost of sales |  | Revenue | Cost of sales
Total amount of income and expense line items presented in the Condensed Consolidated Statements of Income |  | $ | (1,138) |  | $ | (252) |  |  | $ | 317 |  | $ | 147 |
Gain or (loss) on cash flow hedging relationships: |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income |  | $ | (1,138) |  | $ | 827 |  |  | $ | 317 |  | $ | (288) |
Commodity contracts: |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income |  | $ | — |  | $ | (1,079) |  |  | $ | — |  | $ | 435 |

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- References No definition available. + Details
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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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