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Derivative instruments | 12 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative instruments | Derivative instruments The following table presents the fair values of derivative instruments included in the consolidated balance sheets as of December 31, 2022 and 2021:
|  | Assets |  |  | Liabilities
Type of Derivative | Balance Sheets Location | 2022 | 2021 |  | Balance Sheets Location | 2022 | 2021
Derivatives designated as hedging instruments |  |  |  |
Cash Flow hedge |  |  |  |  |  |  |
Forward contracts | Other receivables | $ | 268 |  | $ | 660 |  |  | Accrued payroll and other liabilities | $ | (1,147) |  | $ | (51) |
Cross-currency interest rate swap | Derivative instruments | 43,757 |  | 107,386 |  |  | Derivative instruments | (581) |  | (2,898) |
Subtotal |  | 44,025 |  | 108,046 |  |  |  | (1,728) |  | (2,949) |
Derivatives not designated as hedging instruments |  |  |  |  |  |
Cross-currency interest rate swap | Derivative instruments | 38,031 |  | — |  |  | Derivative instruments | (1,224) |  | — |
Call Spread + Coupon-only swap | Derivative instruments | 6,445 |  | 8,194 |  |  | Derivative instruments | (16,703) |  | (12,473) |
Call spread | Derivative instruments | 3,626 |  | 4,791 |  |  | Derivative instruments | — |  | — |
Coupon-only swap | Derivative instruments | — |  | — |  |  | Derivative instruments | (9,874) |  | (7,555) |
Sustainability-linked ESG Principal Only Swap | Derivative instruments | 1,050 |  | — |  |  | Derivative instruments | — |  | — |
Subtotal |  | 49,152 |  | 12,985 |  |  |  | (27,801) |  | (20,028) |
Total derivative instruments | $ | 93,177 |  | $ | 121,031 |  |  |  | $ | (29,529) |  | $ | (22,977) |
Derivatives designated as hedging instruments Cash flow hedge Forward contracts The Company has entered into various forward contracts in a few territories to hedge a portion of the foreign exchange risk associated with forecasted imports of goods. The effect of the hedges results in fixing the cost of goods acquired (i.e. the net settlement or collection adjusts the cost of inventory paid to the suppliers). As of December 31, 2022, the Company had forward contracts outstanding with a notional amount of $34,843 that mature during 2023. The Company made net collections (payments) totaling $263, $(507) and $1,757 during fiscal years 2022, 2021 and 2020, respectively, as a result of the net settlements of these derivatives. Cross-currency interest rate swap The Company entered into four cross-currency interest rate swap agreements to hedge all the variability of the principal and interest collections of its BRL intercompany loan receivables. The agreements were signed during November 2013 (amended in February 2017), June and July 2017 and October 2020. During September 2022, the Company settled the BRL intercompany loan receivables previously mentioned. Therefore, the hedge relationships of these four cross-currency interest rate swap agreements were discontinued, prospectively. As a consequence, the amounts recorded in accumulated other comprehensive income (loss) until September 2, 2022 were reclassified into earnings, within “(Loss) gain from derivative instruments”. From September 2022, changes in the fair value of these derivatives are recognized immediately in earnings as well, within “(Loss) gain from derivative instruments”. The following table presents information related to the terms of the agreements:
Bank |  | Payable |  | Receivable |  | Interest payment dates |  | Maturity
| Currency |  | Notional |  | Interest rate |  | Currency |  | Notional |  | Interest rate |
JP Morgan Chase Bank, N.A. |  | BRL |  | 108,000 |  |  | 13 | % |  | $ |  | 35,390 |  |  | 4.38 | % |  | March 31/ September 30 |  | September 2023
JP Morgan Chase Bank, N.A. |  | BRL |  | 98,670 |  |  | 13 | % |  | $ |  | 30,000 |  |  | 6.02 | % |  | March 31/ September 30 |  | September 2023
Citibank N.A. |  | BRL |  | 94,200 |  |  | 13 | % |  | $ |  | 30,000 |  |  | 6.29 | % |  | March 31/ September 30 |  | September 2023
Citibank N.A. |  | BRL |  | 112,738 |  |  | 13 | % |  | $ |  | 20,049 |  |  | 8.08 | % |  | March 31/ September 30 |  | September 2023
During April 2017, the Company’s Brazilian subsidiary entered into similar agreements in order to hedge all the variability in a portion (50%) of the principal and interest payable of certain intercompany loan payables nominated in US dollar. Derivatives designated as hedging instruments (continued) Cash flow hedge (continued) Cross-currency interest rate swap (continued) The following table presents information related to the terms of the agreements:
Bank |  | Payable |  | Receivable |  | Interest payment dates |  | Maturity
| Currency |  | Notional |  | Interest rate |  | Currency |  | Notional |  | Interest rate |
BAML (i) |  | BRL |  | 156,250 |  |  | 13.64 | % |  | $ |  | 50,000 |  |  | 6.91 | % |  | March 31/ September 30 |  | April 2027
Banco Santander S.A. |  | BRL |  | 155,500 |  |  | 13.77 | % |  | $ |  | 50,000 |  |  | 6.91 | % |  | June 30/ December 31 |  | September 2023
(i)Bank of America Merrill Lynch Banco Múltiplo S.A. The Company paid $5,637, $4,132 and $4,031 of net interest during the fiscal years ended December 31, 2022, 2021 and 2020, respectively. Call spread During April 2017, the Company’s Brazilian subsidiary entered into two call spread agreements in order to hedge all the variability in a portion (50%) of the principal of certain intercompany loan payables nominated in US dollar. Call spread agreements consist of a combination of two call options: the Company bought an option to buy US dollar at a strike price equal to the BRL exchange rate at the date of the agreements, and wrote an option to buy US dollar at a higher strike price than the previous one. Both pair of options have the same notional amount and are based on the same underlying with the same maturity date. The following table presents information related to the terms of the agreements:
Bank |  | Nominal Amount |  | Strike price |  | Maturity
| Currency |  | Notional |  | Call option written | Call option bought |
Citibank S.A. |  | $ |  | 50,000 |  |  |  | 4.49 |  |  | 3.11 |  |  | September 2023
JP Morgan S.A. |  | $ |  | 50,000 |  |  |  | 5.20 |  |  | 3.13 |  |  | April 2027
In May 2021, the Company unwound these agreements before their maturity and collected $18.8 million (BRL99.7 million). Although the hedge relationships were discontinued, the Company expects to maintain the underlying loans until maturity. As a consequence, the amounts recorded in accumulated other comprehensive loss until May 2021 will be amortized to earnings as the originally hedged cash flows affected earnings. Derivatives designated as hedging instruments (continued) Cash flow hedge (continued) Coupon-only swap During April 2017, the Company’s Brazilian subsidiary entered into two coupon-only swap agreements in order to hedge all the variability in a portion (50%) in the interest payable related to the intercompany loan aforementioned. The following table presents information related to the terms of the agreements:
Bank |  | Payable |  | Receivable |  | Interest payment dates |  | Maturity
| Currency |  | Notional |  | Interest rate |  | Currency |  | Notional |  | Interest rate |
Citibank S.A. |  | BRL |  | 155,500 |  |  | 11.08 | % |  | $ |  | 50,000 |  |  | 6.91 | % |  | June 30/ December 31 |  | September 2023
JP Morgan S.A. |  | BRL |  | 156,250 |  |  | 11.18 | % |  | $ |  | 50,000 |  |  | 6.91 | % |  | March 31/ September 30 |  | April 2027
In May 2021, the Company unwound these agreements before their maturity and collected $4.4 million (BRL23.5 million). Although the hedge relationships were discontinued, the Company expects to maintain the underlying loans until maturity. As a consequence, the amounts recorded in accumulated other comprehensive loss until May 2021 will be amortized to earnings as the originally hedged cash flows affected earnings. The Company made net collections of $170 of net interest during 2021 until the agreements were unwound, and payments amounting to $(197) of net interest during the fiscal year ended December 31, 2020, related to these agreements. Derivatives designated as hedging instruments (continued) Cash flow hedge (continued) Additional disclosures The following table present the pretax amounts affecting income and other comprehensive income (loss) for the fiscal years ended December 31, 2022, 2021 and 2020 for each type of derivative relationship:
Derivatives in Cash Flow Hedging Relationships |  | (Loss) Gain Recognized in Accumulated OCI on Derivative |  | Loss (Gain) Reclassified from Accumulated OCI into income (loss)(i) |  |  |
| 2022 | 2021 | 2020 |  | 2022 | 2021 | 2020 |  |  |  |  |
Forward contracts (i) |  | $ | (1,225) |  | $ | 1,366 |  | $ | 904 |  |  | $ | (263) |  | $ | 507 |  | $ | (1,895) |  |  |  |  |  |
Cross-currency interest rate swaps (ii) |  | (31,174) |  | 23,802 |  | 55,124 |  |  | 8,727 |  | (8,564) |  | (37,376) |  |  |  |  |  |
Call Spread (iii) |  | — |  | (2,593) |  | 6,758 |  |  | 3,275 |  | 1,915 |  | (18,153) |  |  |  |  |  |
Coupon-only swap (iii) |  | — |  | 1,093 |  | 8,604 |  |  | (964) |  | (797) |  | (421) |  |  |  |  |  |
Total |  | $ | (32,399) |  | $ | 23,668 |  | $ | 71,390 |  |  | $ | 10,775 |  | $ | (6,939) |  | $ | (57,845) |  |  |  |  |  |
(i)The results recognized in income related to forward contracts were recorded as an adjustment to food and paper. (ii)The net (loss) gain recognized in income, related to cross-currency interest rate swaps is presented as follows:
Adjustment to: | 2022 |  | 2021 |  | 2020
Foreign currency exchange results | $ | (9,995) |  |  | $ | 12,392 |  |  | $ | 40,353 |
Gain from derivative instruments (i) | 5,907 |  |  | — |  |  | — |
Net interest expense and other financing results | (4,639) |  |  | (3,828) |  |  | (2,977) |
Total | $ | (8,727) |  |  | $ | 8,564 |  |  | $ | 37,376 |
(i) Related to the discontinued relationships of Cross-currency interest rate swaps during September 2022. The results recognized in income related to call spread agreements and coupon-only swap agreements were recorded as an adjustment to foreign currency exchange and interest expense, respectively. (iii) Agreements unwound in May 2021. The results recognized in income related to Call Spread agreements were recorded as an adjustment to “Foreign currency exchange results”. The results recognized in income related to Coupon-only agreements were recorded as an adjustment to “Net interest expense and other financing results”. Derivatives not designated as hedging instruments In addition to the four cross-currency interest rate swap agreements previously mentioned, which hedge relationships were discontinued in September 2022, the Company entered into certain derivatives that are not designated as hedge accounting, therefore the changes in the fair value of these derivatives are recognized immediately in earnings, within “(Loss) gain from derivative instruments”. The following tables present information related to the terms of the agreements:
| Type of derivative |  | Entity |  | Nominal Amount |  | Strike price |  | Maturity |
|  |  | Currency |  | Notional |  | Call option bought | Call option written |  |
| Call Spread |  | JPMorgan |  | $ |  | 30,000 |  |  |  | 5.62 |  | 8.20 |  | April 2027 |
| Call Spread |  | Itaú Unibanco S.A. (i) |  | $ |  | 50,000 |  |  |  | 5.62 |  | 8.20 |  | April 2027 |
| Type of derivative |  | Entity |  | Payable |  | Receivable |  | Interest payment dates |  | Maturity
|  |  | Currency |  | Notional |  | Interest rate (ii) |  | Currency |  | Notional |  | Interest rate |  |
| Coupon-only swap |  | JPMorgan |  | BRL |  | 168,690 |  |  | CDI plus 2.42% |  | $ |  | 30,000 |  |  | 5.46 | % |  | April 30/ October 31 |  | April 2027
| Coupon-only swap |  | Itaú Unibanco S.A. (i) |  | BRL |  | 281,150 |  |  | CDI plus 2.47% |  | $ |  | 50,000 |  |  | 5.46 | % |  | April 30/ October 31 |  | April 2027
| Sustainability-linked ESG Principal Only Swap |  | Citibank S.A. |  | BRL |  | 155,500 |  |  | Fixed 0.88% |  | $ |  | 50,000 |  |  | - |  | April 30/ October 31 |  | April 2027
(i) Combination of call spread and coupon only swap into one agreement with Itaú Unibanco S.A (ii) “CDI” Certificados de Depósitos Interbancários The Company paid $7,440 and $127 during fiscal year ended December 31, 2022 and 2021, respectively, related to this agreements. In addition, during the fiscal years ended December 31, 2022, 2021 and 2020, the Company entered into certain forward contracts that generated net collections and (payments) of $1,128, $nil and $(39), respectively.

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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 https://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 https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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