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

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

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	—

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 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 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.”


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.