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 which is considered a Level 2 fair value measurement.

At July 3, 2022 and December 31, 2021, 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 2024, 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.

Certain derivative contracts entered into to manage the cost of anticipated purchases of natural gas and aluminum have been designated by the Company as cash flow hedges. At July 3, 2022, these contracts included natural gas swaps covering approximately 1.1 million MMBTUs. These contracts represented approximately 25% of anticipated usage in North America for the remainder of 2022, and 1% of anticipated usage in both 2023 and 2024. The Company also has certain natural gas hedges that it does not treat as cash flow hedges. See "Non-Designated Derivatives" below for a discussion of these hedges. At July 3, 2022, the Company had designated swap contracts covering 84 metric tons of aluminum as cash flow hedges. These contracts represented approximately 3% of anticipated aluminum usage for the remainder of 2022. The fair value of the Company’s commodity cash flow hedges netted to a gain position of $2,700 and $1,491 at July 3, 2022 and December 31, 2021, respectively. The amount of the gain included in Accumulated Other Comprehensive Income at July 3, 2022 expected to be reclassified to the income statement during the next twelve months is $2,696.

The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales, purchases, and capital spending expected to occur in 2022 and 2023. The net positions of these contracts at July 3, 2022 were as follows (in thousands):


Currency	Action	Quantity
Colombian peso	purchase	13,591,224
Mexican peso	purchase	244,790
Polish zloty	purchase	44,467
Czech koruna	purchase	33,398
Euro	purchase	10,449
Turkish lira	purchase	9,356
Canadian dollar	purchase	7,809
British pound	purchase	1,005
Brazilian real	sell	(6,286)

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 construction in progress. As of July 3, 2022 and December 31, 2021, the net position of these contracts was $(938) and $(457), respectively. During the six months ended July 3, 2022, losses from these hedges totaling $657 were reclassified from accumulated other comprehensive loss and included in the carrying value of the capitalized expenditures. Losses of $875 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.

The Company routinely enters into other derivative contracts which are not designated for hedge accounting treatment under ASC 815. As such, changes in fair value of these non-designated derivatives are recorded directly to income and expense in the periods that they occur.

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 net currency positions of these non-designated contracts at July 3, 2022, were as follows (in thousands):


Currency	Action	Quantity
Colombian peso	purchase	31,847,040
Indonesian rupiah	purchase	30,335,671
Mexican peso	purchase	388,269
Turkish lira	purchase	36,904
Thai baht	purchase	9,251
Canadian dollar	purchase	4,026
Euro	purchase	20

The Company has entered into non-designated derivative contracts to manage the cost of anticipated purchases of natural gas. At July 3, 2022, these contracts consisted of natural gas swaps covering approximately 5.3 million MMBTUs and represented approximately 46% of anticipated usage in North America for the remainder of 2022, and 27% and 17% of anticipated usage in 2023 and 2024, respectively.

Pursuant to the registered public offering of unsecured 2.850% 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 of $(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 gain is included in "Selling, general and administrative expenses" on the Company's Condensed Consolidated Statements of Income for the six months ended July 3, 2022.

The following table sets forth the location and fair values of the Company’s derivative instruments at July 3, 2022 and December 31, 2021:


Description	Balance Sheet Location	July 3, 2022		December 31, 2021
Derivatives designated as hedging instruments:
Commodity Contracts	Prepaid expenses	$	2,822	$	1,599
Commodity Contracts	Other assets	$	5	$	—
Commodity Contracts	Accrued expenses and other	$	(127)	$	(108)

Foreign Exchange Contracts	Prepaid expenses	$	936	$	848
Foreign Exchange Contracts	Accrued expenses and other	$	(1,432)	$	(969)
Foreign Exchange Contracts	Other liabilities	$	(63)	$	—
Derivatives not designated as hedging instruments:
Commodity Contracts	Prepaid expenses	$	4,688	$	1,815
Commodity Contracts	Other assets	$	197	$	—
Commodity Contracts	Accrued expenses and other	$	—	$	(1,132)
Commodity Contracts	Other liabilities	$	(957)	$	—
Foreign Exchange Contracts	Prepaid expenses	$	26	$	135

Foreign Exchange Contracts	Accrued expenses and other	$	(275)	$	(176)
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 three months ended July 3, 2022 and July 4, 2021, excluding the amount of 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:
Three months ended July 3, 2022
Foreign Exchange Contracts	$	(1,324)	Net sales	$	843
			Cost of sales	$	(1,011)
Commodity Contracts	$	850	Cost of sales	$	1,979
Three months ended July 4, 2021
Foreign Exchange Contracts	$	751	Net sales	$	1,489
			Cost of sales	$	(1,190)
Commodity Contracts	$	4,847	Cost of sales	$	646

Description

Gain or (Loss)
Recognized

Location of Gain or (Loss) Recognized in
Income Statement

Derivatives not Designated as Hedging Instruments:

Three months ended July 3, 2022

Commodity Contracts

506

Cost of sales

Foreign Exchange Contracts

(1,142)

Selling, general and administrative

Three months ended July 4, 2021

Commodity Contracts

Cost of sales

Foreign Exchange Contracts

220

Selling, general and administrative

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the six months ended July 3, 2022 and July 4, 2021, excluding the amount of 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:
Six months ended July 3, 2022
Foreign Exchange Contracts	$	88	Net sales	$	1,866
			Cost of sales	$	(1,706)
Commodity Contracts	$	4,183	Cost of sales	$	2,937
Six months ended July 4, 2021
Foreign Exchange Contracts	$	563	Net sales	$	1,829
			Cost of sales	$	(1,418)
Commodity Contracts	$	6,601	Cost of sales	$	575

Description

Gain or (Loss)
Recognized

Location of Gain or (Loss) Recognized in
Income Statement

Derivatives not Designated as Hedging Instruments:

Six months ended July 3, 2022

Commodity Contracts

7,498

Cost of sales

Foreign Exchange Contracts

201

Selling, general and administrative

Six months ended July 4, 2021

Commodity Contracts

434

Cost of sales

Foreign Exchange Contracts

(405)

Selling, general and administrative


	Six months ended July 3, 2022				Six months ended July 4, 2021
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	$	1,866	$	1,231	$	1,829	$	(843)















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	$	1,866	$	(1,706)	$	1,829	$	(1418)


Commodity contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income	$	—	$	2,937	$	—	$	575