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 October 1, 2023 and December 31, 2022, 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. Cash flows from derivative financial instruments designated as cash flow hedges are classified as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows.

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 October 1, 2023, these contracts included natural gas swaps covering approximately 0.08 million metric million British thermal units (“MMBTUs”). These contracts represented approximately 0.9% of anticipated usage in North America for 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 October 1, 2023, the Company has also designated swap contracts covering 179 metric tons of aluminum as cash flow hedges. The fair value of the Company’s commodity cash flow hedges netted to a loss position of $(147) and $(172) at October 1, 2023 and December 31, 2022, respectively. The amount of the loss included in accumulated other comprehensive loss at October 1, 2023 expected to be reclassified to the income statement during the next twelve months is $(137).

The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales, purchases, and capital spending expected to occur in 2023 and 2024. The net positions of these contracts at October 1, 2023 were as follows (in thousands):


Currency	Action	Quantity
Colombian peso	purchase	8,369,071
Mexican peso	purchase	149,124
Polish zloty	purchase	24,703
Czech koruna	purchase	14,187
Canadian dollar	purchase	3,104
Euro	purchase	149
Turkish lira	purchase	2,635
Brazilian real	purchase	1,367
British pound	purchase	1,131

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $1,844 and a loss position of $(299) at October 1, 2023 and December 31, 2022, respectively. Gains of $1,844 are expected to be reclassified from accumulated other comprehensive income to the income statement during the next twelve months. In addition, the Company has from time to time entered into forward contracts to hedge certain foreign currency cash flow transactions related to construction in progress. As of October 1, 2023 and December 31, 2022, the net position of these contracts was $0 and $(564), respectively. During the nine-month period ended October 1, 2023, losses from these hedges totaling $(401) were reclassified from accumulated other comprehensive loss into the carrying value of the capitalized expenditures. As of October 1, 2023, no amounts are expected to be reclassified from accumulated other comprehensive loss into the carrying value of the related fixed assets 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. Cash flows from derivative financial instruments not designated as hedges are classified as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows.

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 October 1, 2023, were as follows (in thousands):


Currency	Action	Quantity
Indonesian rupiah	purchase	3,544,012
Colombian peso	purchase	67,456,759
Mexican peso	purchase	545,248
Turkish lira	purchase	8,766
Canadian dollar	purchase	11,548

British pound	purchase	2,784
Polish zloty	purchase	8,526

The Company has entered into non-designated derivative contracts to manage the cost of anticipated purchases of natural gas. At October 1, 2023, these contracts consisted of natural gas swaps covering approximately 5.5 million MMBTUs and represented approximately 76% and 55% of anticipated usage for 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 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 nine-month period ended October 2, 2022.

The following table sets forth the location and fair values of the Company’s derivative instruments at October 1, 2023 and December 31, 2022:


Description	Balance Sheet Location	October 1, 2023		December 31, 2022
Derivatives designated as hedging instruments:
Commodity Contracts	Prepaid expenses	$	—	$	10
Commodity Contracts	Other assets	$	—	$	8
Commodity Contracts	Accrued expenses and other	$	(137)	$	(155)
Commodity Contracts	Other liabilities	$	(10)	$	(35)
Foreign Exchange Contracts	Prepaid expenses	$	2,848	$	1,251

Foreign Exchange Contracts	Accrued expenses and other	$	(1,004)	$	(2,114)

Derivatives not designated as hedging instruments:
Commodity Contracts	Prepaid expenses	$	5	$	5
Commodity Contracts	Other assets	$	24	$	251
Commodity Contracts	Accrued expenses and other	$	(6,763)	$	(8,599)
Commodity Contracts	Other liabilities	$	(427)	$	(295)
Foreign Exchange Contracts	Prepaid expenses	$	773	$	115

Foreign Exchange Contracts	Accrued expenses and other	$	(456)	$	(169)

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-month periods ended October 1, 2023 and October 2, 2022, 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-month period ended October 1, 2023
Foreign Exchange Contracts	$	(509)	Net sales	$	3,195
			Cost of sales	$	(1,180)
Commodity Contracts	$	140	Cost of sales	$	—
Three-month period ended October 2, 2022
Foreign Exchange Contracts	$	(290)	Net sales	$	559
			Cost of sales	$	(433)
Commodity Contracts	$	1,626	Cost of sales	$	2,434

Description

Gain or (Loss)
Recognized

Location of Gain or (Loss) Recognized in
Income Statement

Derivatives not Designated as Hedging Instruments:

Three-month period ended October 1, 2023

Commodity Contracts

(2,118)

Cost of sales

Foreign Exchange Contracts

579

Selling, general and administrative

Three-month period ended October 2, 2022

Commodity Contracts

2,574

Cost of sales

Foreign Exchange Contracts

(484)

Selling, general and administrative

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the nine months ended October 1, 2023 and October 2, 2022, 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:
Nine-month period ended October 1, 2023
Foreign Exchange Contracts	$	6,517	Net sales	$	6,772
			Cost of sales	$	(2,552)
Commodity Contracts	$	(6)	Cost of sales	$	(32)
Nine-month period ended October 2, 2022
Foreign Exchange Contracts	$	(202)	Net sales	$	2,425
			Cost of sales	$	(2,139)
Commodity Contracts	$	5,809	Cost of sales	$	5,371

Description

Gain or (Loss)
Recognized

Location of Gain or (Loss) Recognized in
Income Statement

Derivatives not Designated as Hedging Instruments:

Nine-month period ended October 1, 2023

Commodity Contracts

(13,635)

Cost of sales

Foreign Exchange Contracts

4,651

Selling, general and administrative

Nine-month period ended October 2, 2022

Commodity Contracts

10,072

Cost of sales

Foreign Exchange Contracts

(283)

Selling, general and administrative


	Nine-month period ended October 1, 2023				Nine-month period ended October 2, 2022
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	$	6,772	$	(2,584)	$	2,425	$	3,232















Gain or (loss) on cash flow hedging relationships:
Foreign exchange contracts:
Amount of gain/(loss) reclassified from accumulated other comprehensive income into net income	$	6,772	$	(2,552)	$	2,425	$	(2,139)


Commodity contracts:
Amount of gain reclassified from accumulated other comprehensive income into net income	$	—	$	(32)	$	—	$	5,371