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Financial instruments and derivatives | 12 Months Ended
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Dec. 31, 2021
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.
| December 31, 2021 |  | December 31, 2020
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Long-term debt, net of current portion | $ | 1,199,106 |  |  | $ | 1,434,711 |  |  | $ | 1,244,440 |  |  | $ | 1,538,132 |
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. Cash Flow Hedges At December 31, 2021 and 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 earning effect of the hedged item. Commodity Cash Flow Hedges Certain derivative contracts entered into to manage the cost of anticipated purchases of natural gas and aluminum have been designated by the Company as hedges. At December 31, 2021, these contracts included natural gas swaps covering approximately 1.7 million MMBTUs. The Company also has certain natural gas hedges that it does not treat as Cash Flow Hedges. See Other Derivatives below for a discussion of these hedges. The fair values of the Company’s commodity cash flow hedges netted to a gain position of $1,491 at December 31, 2021 and a loss position of $(647) at December 31, 2020. The amount of the gain included in accumulated other comprehensive loss at December 31, 2021 expected to be reclassified to the income statement during the next twelve months is $1,491. 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 2022. The net positions of these contracts at December 31, 2021, were as follows (in thousands):
Currency | Action | Quantity
Colombian peso | Purchase | 26,964,039 |
Mexican peso | Purchase | 478,872 |
Polish zloty | Purchase | 86,960 |
Czech koruna | Purchase | 66,323 |
Turkish lira | Purchase | 16,776 |
Canadian dollar | Purchase | 15,862 |
Euro | Purchase | 7,315 |
British pound | Purchase | 3,541 |
New Zealand dollar | Sell | (290) |
Australian dollar | Sell | (422) |
Russian ruble | Sell | (89,271) |
The fair value of the Company’s foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $336 and $555 at December 31, 2021 and December 31, 2020, respectively. Gains of $336 are expected to be reclassified from accumulated other comprehensive loss 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 equipment purchases denominated in a foreign currency. As of December 31, 2021 and December 31, 2020, the net position of these contracts was $(457) and $47, respectively. During the twelve months ended December 31, 2021, losses from these hedges totaling $(330) were reclassified from accumulated other comprehensive loss and included in the carrying value of the capitalized expenditures. Losses of $(457) are expected to be reclassified from accumulated other comprehensive loss and included in the carrying value of the related fixed assets acquired during the next twelve months. 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 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. Other Derivatives The Company routinely enters into forward contracts 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 December 31, 2021, were as follows (in thousands):
Currency | Action | Quantity
Colombian peso | Purchase | 28,089,457 |
Indonesian rupiah | Purchase | 21,279,953 |
Mexican peso | Purchase | 357,895 |
Turkish lira | Purchase | 38,142 |
Thai Baht | Purchase | 16,436 |
Canadian dollar | Purchase | 2,682 |
In addition to the contracts designated as cash flow hedges described above, the Company has entered into derivative contracts to manage the cost of anticipated purchases of natural gas. At December 31, 2021, these contracts consisted of natural gas swaps covering approximately 3.9 million MMBTUs. The Company's designated and non-designated natural gas derivative contracts total approximately 5.6 million MMBTUs and represent approximately 73% of anticipated natural gas usage in North America for 2022. Pursuant to the registered public offering of unsecured 2.85% notes with a principal amount of $500,000 maturing on February 1, 2032, the Company entered into treasury lock derivative instruments with two banks, with a notional principal amount of $150,000 each on December 29, 2021. These instruments had the risk management objective of reducing exposure to the Company of increases in the underlying Treasury index up to the date of pricing of the notes. The fair value of the contracts was a net loss position o f $(550) at December 31, 2021. The derivatives were settled when the bonds priced on January 11, 2022, with the Company recognizing a gain on the settlement of $5,201. The fair value of the Company’s other derivatives were net gains o f $92 and $599 at December 31, 2021 and 2020, respectively. The following table sets forth the location and fair values of the Company’s derivative instruments at December 31, 2021 and 2020:
|  |  | Fair Value at December 31
Description | Balance Sheet Location |  | 2021 |  | 2020
Derivatives designated as hedging instruments: |  |  |  |  |
Commodity Contracts | Prepaid expenses |  | $ | 1,599 |  |  | $ | 867 |
Commodity Contracts | Accrued expenses and other |  | $ | (108) |  |  | $ | (1,512) |
Commodity Contracts | Other liabilities |  | $ | — |  |  | $ | (2) |
Foreign Exchange Contracts | Prepaid expenses |  | $ | 848 |  |  | $ | 997 |
Foreign Exchange Contracts | Accrued expenses and other |  | $ | (969) |  |  | $ | (395) |
Derivatives not designated as hedging instruments: |  |  |  |  |
Commodity Contracts | Prepaid expenses |  | $ | 1,815 |  |  | $ | 484 |
Commodity Contracts | Accrued expenses and other |  | $ | (1,132) |  |  |
Foreign Exchange Contracts | Prepaid expenses |  | $ | 135 |  |  | $ | 140 |
Foreign Exchange Contracts | Accrued expenses and other |  | $ | (176) |  |  | $ | (25) |
Interest Rate Lock Contract | Accrued expenses and other |  | $ | (550) |  |  | $ | — |
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 year ended December 31, 2021 and December 31, 2020, excluding the gains on foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss 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: |  |
Year Ended December 31, 2021 |  |  |  |  |  |
Foreign Exchange Contracts |  | $ | 210 |  |  | Net sales |  | $ | 3,212 |
|  |  |  | Cost of sales |  | $ | (2,544) |
Commodity Contracts |  | $ | 10,039 |  |  | Cost of sales |  | $ | 7,794 |
Year Ended December 31, 2020 |  |  |  |  |  |
Foreign Exchange Contracts |  | $ | (3,596) |  |  | Net sales |  | $ | (6,662) |
|  |  |  | Cost of sales |  | $ | 3,576 |
Commodity Contracts |  | $ | (227) |  |  | Cost of sales |  | $ | (1,213) |
Description |  | Gain or (Loss) Recognized |  | Location of Gain or (Loss) Recognized in Income Statement
Derivatives not Designated as Hedging Instruments: |  |  |  |
Year Ended December 31, 2021 |  |  |  |
Commodity Contracts |  | $ | 1,118 |  |  | Selling, general and administrative
Foreign Exchange Contracts |  | $ | (737) |  |  | Selling, general and administrative
Interest Rate Lock Contracts |  | $ | (550) |  |  | Selling, general and administrative
Year Ended December 31, 2020 |  |  |  |
Commodity Contracts |  | $ | 226 |  |  | Cost of sales
Foreign Exchange Contracts |  | $ | (358) |  |  | Selling, general and administrative
|  | Year Ended December 31, 2021 |  | Year Ended December 31, 2020
Description | Revenue | Cost of Sales |  | Revenue | Cost of Sales
Total amount of income and expense line items presented in the Consolidated Statements of Income | $ | 3,212 |  | $ | 5,250 |  |  | $ | (6,662) |  | $ | 2,363 |
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 | $ | 3,212 |  | $ | (2,544) |  |  | $ | (6,662) |  | $ | 3,576 |
Commodity contract: |  |  |  |  |
| Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income | $ | — |  | $ | 7,794 |  |  | $ | — |  | $ | (1,213) |

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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 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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