The carrying value of cash and cash equivalents and short-term 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.

On April 28, 2021, subsequent to the end of the quarter, the Company commenced a cash tender offer to purchase up to $300,000 of the $600,000 outstanding principal amount of its 5.75% notes due November 2040. The offer, which will expire on May 25, 2021, unless extended or terminated earlier by the Company, includes an early tender premium of fifty dollars per thousand dollar principal amount for notes validly tendered by May 11, 2021. At April 4, 2021, the Company estimated the fair value of the 5.75% notes due November 2040 to exceed their carrying value by approximately 25%. On April 28, 2021, the Company entered into a reverse treasury lock agreement intended to fix the cash cost to fund approximately $100,000 of the maximum $300,000 principal amount subject to being tendered. The Company intends to use available cash on hand to purchase the notes validly tendered under this offer.

At April 4, 2021 and December 31, 2020, 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 2022, 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.

The Company has entered into certain derivative contracts to manage the cost of anticipated purchases of natural gas and aluminum. At April 4, 2021, natural gas swaps covering approximately 7.1 million MMBTUs were outstanding. These contracts represent approximately 67% and 41% of anticipated usage in North America for 2021 and 2022, respectively. Additionally, the Company had swap contracts covering 2,763 metric tons of aluminum, representing approximately 55% of anticipated usage for the remainder of 2021. The fair values of the Company’s commodity cash flow hedges netted to a gain position of $1,179 at April 4, 2021 and a loss position of $(647) at December 31, 2020. The amount of the gain included in Accumulated Other Comprehensive Income at April 4, 2021, that is expected to be reclassified to the income statement during the next twelve months is $953.

The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales, purchases, and capital spending expected to occur in 2021 and 2022. The net positions of these contracts at April 4, 2021 were as follows (in thousands):


Currency	Action	Quantity
Colombian peso	purchase	14,932,417
Mexican peso	purchase	305,027
Polish zloty	purchase	62,173
Canadian dollar	purchase	16,254
Euro	purchase	10,486
British pound	purchase	4,039
Turkish lira	purchase	1,835
New Zealand dollar	sell	(539)
Australian dollar	sell	(840)

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $311 and $555 at April 4, 2021 and December 31, 2020, respectively. Gains of $311 are expected to be reclassified from accumulated other comprehensive income to the income statement during the next twelve months. In addition, the Company has entered into forward contracts to hedge certain foreign currency cash flow transactions related to construction in progress. As of April 4, 2021 and December 31, 2020, the net position of these contracts was $(289) and $47 respectively. During the three months ended April 4, 2021, gains from these hedges totaling $13 were reclassified from accumulated other comprehensive income and included in the carrying value of the capitalized expenditures. Losses of $(266) are expected to be reclassified from accumulated other comprehensive income and included in the carrying value of the related fixed assets acquired during the next twelve months.

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 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 and 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.

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 Company has entered into certain other derivative contracts to manage the cost of purchases of diesel fuel. At April 4, 2021, diesel swaps covering approximately 0.5 million gallons were outstanding.


Description	Balance Sheet Location	April 4, 2021		December 31, 2020
Derivatives designated as hedging instruments:
Commodity Contracts	Prepaid expenses	$	1,526	$	867
Commodity Contracts	Other assets	$	226	$	—
Commodity Contracts	Accrued expenses and other	$	(573)	$	(1,512)
Commodity Contracts	Other liabilities	$	—	$	(2)
Foreign Exchange Contracts	Prepaid expenses	$	946	$	997
Foreign Exchange Contracts	Accrued expenses and other	$	(901)	$	(395)
Foreign Exchange Contracts	Other liabilities	$	(23)	$	—
Derivatives not designated as hedging instruments:
Commodity Contracts	Prepaid expenses	$	523	$	484
Foreign Exchange Contracts	Prepaid expenses	$	281	$	140

Foreign Exchange Contracts	Accrued expenses and other	$	(34)	$	(25)

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 Company's 1%, 150,000 euro-denominated debt matures on May 25, 2021. On April 7, 2021, subsequent to the end of the quarter, the Company entered into two forward contracts to buy a total of 150,000 euros. The risk management objective of the forward contracts, which mature on May 21, 2021, is to manage foreign currency risk related to the Company's funding of the debt repayment upon maturity. The U.S. dollar equivalent balance of the euro-denominated debt was approximately $176,100 at April 4, 2021.

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three months ended April 4, 2021 and March 29, 2020, excluding the gains on foreign currency cash flow hedges that were reclassified from accumulated other comprehensive income to the carrying value of the capitalized expenditures:


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 April 4, 2021
Foreign Exchange Contracts	$	(188)	Net sales	$	340
			Cost of sales	$	(228)
Commodity Contracts	$	1,754	Cost of sales	$	(71)
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)

Description

Gain or (Loss)
Recognized

Location of Gain or (Loss) Recognized in
Income Statement

Derivatives not Designated as Hedging Instruments:

Three months ended April 4, 2021

Commodity Contracts

378

Cost of sales

Foreign Exchange Contracts

(625)

Selling, general and administrative

Three months ended March 29, 2020

Commodity Contracts

—

Cost of sales

Foreign Exchange Contracts

(4,917)

Selling, general and administrative


	Three months ended April 4, 2021				Three months ended March 29, 2020
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	$	340	$	(299)	$	(1,138)	$	(252)

The effects of cash flow hedging:













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	$	340	$	(228)	$	(1,138)	$	827


Commodity contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income	$	—	$	(71)	$	—	$	(1,079)