XML 49 R32.htm IDEA: XBRL DOCUMENT
v3.22.4

Financial Derivatives and Hedging Activities | 12 Months Ended
--- | ---
Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Derivatives and Hedging Activities | FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i) hedge foreign currency risks associated with forecasted transactions – “cash flow hedges”; ii) mitigate the impact that changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and payables – “foreign currency hedges”; or iii) convert variable interest rate debt to fixed rates. Derivatives Designated as Hedging Instruments - Cash Flow Hedges We designate certain currency forward contracts as cash flow hedges of forecasted raw material purchases, certain production costs or capital expenditures with exposure to changes in foreign currency exchange rates. Changes in the fair value of derivatives that are designated and qualify as cash flow hedges of foreign exchange risk are deferred as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. With respect to hedges of forecasted raw material purchases or production costs, the amount deferred is subsequently reclassified into costs of products sold in the period that inventory produced using the hedged transaction affects earnings. For hedged capital expenditures, deferred gains or losses are reclassified and included in the historical cost of the capital asset and subsequently affect earnings as depreciation is recognized. We had the following outstanding derivatives that were used to hedge foreign exchange risks associated with forecasted transactions and designated as hedging instruments:
| December 31,
In thousands | 2022 |  | 2021
Derivative |  |  |
Sell/Buy - sell notional |  |  |
Euro / British Pound | 18,961 |  |  | 18,823 |
U.S. Dollar / British Pound | 34,501 |  |  | 16,205 |
U.S. Dollar / Euro | 824 |  |  | 658 |
Sell/Buy - buy notional |  |  |
Euro / Philippine Peso | 1,030,114 |  |  | 896,291 |
British Pound / Philippine Peso | 1,144,839 |  |  | 1,121,183 |
Euro / U.S. Dollar | 78,435 |  |  | 108,467 |
U.S. Dollar / Canadian Dollar | 36,423 |  |  | 36,904 |
These contracts have maturities of eighteen months or less. On June 15, 2022, we terminated a €180 million notional value floating-to-fixed interest rate swap agreement with certain financial institutions that was entered into in October 2019 and was to mature in December 2022. During the life of the swap, we paid a fixed interest rate of the applicable margin plus 0.0395% on €180 million of the underlying variable rate term loan. We received the greater of 0.00% or EURIBOR. At termination, we recognized a deferred gain of $0.4 million that will be amortized into interest expense through December 2022. Derivatives Designated as Hedging Instruments – Net Investment Hedge The €220 million Term Loan discussed in Note 20 – “Long-Term Debt” is designated as a net investment hedge of our Euro functional currency foreign subsidiaries. During 2022, we recognized a pre-tax gain of $10.8 million and in 2021 a pre-tax gain of $18.6 million on the remeasurement of the term loan from changes in currency exchange rates. Such amounts are recorded as a component of Other Comprehensive Income (Loss). On September 6, 2022, we terminated a $150.0 million cross currency swap agreement with certain financial institutions that was entered into in March 2022 and was to mature in May 2025. Pursuant to the terms of the swap, we agreed to receive 4.750% interest denominated in U.S. dollars and we agreed to pay 3.06% interest denominated in euros. We designated the cross-currency swap as a hedge of our net investment in certain euro functional currency subsidiaries. We collected cash proceeds of approximately $15.2 million upon termination. The gain associated with the swap remains in accumulated other comprehensive loss. Derivatives Not Designated as Hedging Instruments - Foreign Currency Hedges We also enter into forward foreign exchange contracts to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities. None of these contracts are designated as hedges for financial accounting purposes and, accordingly, changes in value of the foreign exchange forward contracts and in the offsetting underlying on-balance-sheet transactions are reflected in the accompanying consolidated statements of income (loss) under the caption “Other, net.”
| December 31,
In thousands | 2022 |  | 2021
Derivative |  |  |
Sell/Buy - sell notional |  |  |
U.S. Dollar / British Pound | 28,600 |  |  | 26,600 |
British Pound / Euro | 2,800 |  |  | 3,400 |
U.S. Dollar / Swiss Franc | — |  |  | 2,180 |
British Pound / Swiss Franc | 2,535 |  |  | 1,025 |
Euro / Swiss Franc | — |  |  | 2,750 |
Euro / U.S. Dollar | 9,630 |  |  | 11,000 |
Sell/Buy - buy notional |  |  |
Euro / U.S. Dollar | 2,900 |  |  | 20,900 |
British Pound / Euro | 15,950 |  |  | 5,300 |
Swiss Franc / Euro | 2,250 |  |  | — |
Swiss Franc / U.S. Dollar | 930 |  |  | — |
Chinese Yuan / U.S. Dollar | 4,400 |  |  | — |
These contracts have maturities of one month from the date originally entered into. Fair Value Measurements The following table summarizes the fair values of derivative instruments as of December 31 for the year indicated and the line items in the accompanying consolidated balance sheets where the instruments are recorded:
| December 31, |  | December 31,
In thousands | 2022 |  | 2021 |  | 2022 |  | 2021
Balance sheet caption | Prepaid Expenses and Other Current Assets |  | Other Current Liabilities
Designated as hedging: |  |  |  |  |  |  |
Forward foreign currency exchange contracts | $ | 1,795 |  |  | $ | 3,197 |  |  | $ | 2,368 |  |  | $ | 288 |
Interest rate swap | — |  |  | — |  |  | — |  |  | 44 |
Not designated as hedging: |  |  |  |  |  |  |
Forward foreign currency exchange contracts | 797 |  |  | 701 |  |  | 317 |  |  | 116 |
The amounts set forth in the table above represent the net asset or liability giving effect to rights of offset with each counterparty. The following table summarizes the amount of income or loss from derivative instruments recognized in our results of operations for the periods indicated and the line items in the accompanying consolidated statements of income (loss) where the results are recorded:
| Year ended December 31,
In thousands | 2022 |  | 2021 |  | 2020
Designated as hedging: |  |  |  |  |
Forward foreign currency exchange contracts: |  |  |  |  |
Cost of products sold | $ | (7,896) |  |  | $ | (382) |  |  | $ | (5,503) |
Interest expense | (335) |  |  | 85 |  |  | 83 |
Not designated as hedging: |  |  |  |  |
Forward foreign currency exchange contracts: |  |  |  |  |
Other – net | 1,240 |  |  | 2,666 |  |  | 1,679 |
The impact of activity not designated as hedging was substantially all offset by the remeasurement of the underlying on-balance sheet item. The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described in Note 2 – “Accounting Policies.” The fair values of the foreign exchange forward contracts are considered to be Level 2. These contracts are valued using foreign currency forward and interest rate curves. The fair value of each contract is determined by comparing the contract rate to the forward rate and discounting to present value. Contracts in a gain position are recorded in the accompanying consolidated balance sheets under the caption “Prepaid expenses and other current assets” and the value of contracts in a loss position is recorded under the caption “Other current liabilities.” A rollforward of fair value amounts recorded as a component of accumulated other comprehensive income is as follows:
In thousands | 2022 |  | 2021
Balance at January 1, | $ | 2,889 |  |  | $ | (3,460) |
Deferred gains on cash flow hedges | 5,584 |  |  | 6,646 |
Reclassified to earnings | (8,231) |  |  | (297) |
Balance at December 31, | $ | 242 |  |  | $ | 2,889 |
We expect substantially all of the amounts recorded as a component of accumulated other comprehensive income will be realized in results of operations within the next twelve to eighteen months and the amount ultimately recognized will vary depending on actual market rates. Credit risk related to derivative activity arises in the event a counterparty fails to meet its obligations to us. This exposure is generally limited to the amounts, if any, by which the counterparty’s obligations exceed our obligation to them. Our policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration