XML 37 R17.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Fair Value Measurements And Derivative Instruments | 12 Months Ended
--- | ---
Dec. 31, 2021
Fair Value Disclosures [Abstract] |
Fair Value Measurements And Derivative Instruments | Fair Value Measurements and Derivative Instruments Fair Value Measurements Depending on the inputs, we classify each fair value measurement as follows: •Level 1 – based upon quoted prices for identical instruments in active markets, •Level 2 – based upon quoted prices for similar instruments, prices for identical or similar instruments in markets that are not active, or model-derived valuations of all of whose significant inputs are observable, and •Level 3 – based upon one or more significant unobservable inputs. The following section describes key inputs and assumptions used in valuation methodologies of our assets and liabilities measured at fair value on a recurring basis: Cash and cash equivalents, short-term notes and accounts receivable, accounts payable and other current payables – The carrying amount approximates fair value because of the short maturity of these instruments. Debt – The fair value of our debt as of December 31, 2021 and 2020 was $1,051.6 million and $1,453.1 million, respectively. The fair values were determined using Level 3 inputs. Foreign currency derivatives – Foreign currency derivatives are carried at fair value using Level 2 inputs. We had an outstanding gain of $0.4 million as of December 31, 2021 and an outstanding loss of $0.1 million as of December 31, 2020. Commodity derivative contracts – Commodity derivative contracts are carried at fair value. We determine the fair value using observable, quoted refined oil product prices that are determined by active markets and therefore classify the commodity derivative contracts as Level 2. We had outstanding unrealized gains of $8.5 million as of December 31, 2021, outstanding unrealized gains of $0.6 million and outstanding unrealized losses of $2.8 million as of December 31, 2020. Interest rate swap contracts – Interest rate swap contracts are carried at fair value. We determine the fair value using the income approach to value the derivatives, using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single discounted present amount reflecting current market expectations about those future amounts. We had outstanding unrealized gains of $6.1 million and outstanding unrealized losses of $0.1 million as of December 31, 2021. We had no outstanding unrealized gains and outstanding unrealized losses of $11.9 million as of December 31, 2020. Additional fair value information related to our pension funds' assets can be found in Note 11, "Retirement Plans and Post-Employment Benefits". Derivative Instruments We use derivative instruments as part of our overall foreign currency and commodity risk management strategies to manage the risk of exchange rate movements that would reduce the value of our foreign cash flows and to minimize commodity price volatility. Foreign currency exchange rate movements create a degree of risk by affecting the value of sales made and costs incurred in currencies other than the U.S. dollar. Certain of our derivative contracts contain provisions that require us to provide collateral. Since the counterparties to these financial instruments are large commercial banks and similar financial institutions, we do not believe that we are exposed to material counterparty credit risk. We do not anticipate nonperformance by any of the counterparties to our instruments. Foreign currency derivatives We enter into foreign currency derivatives from time to time to attempt to manage exposure to changes in currency exchange rates. These foreign currency instruments, which include, but are not limited to, forward exchange contracts and purchased currency options, attempt to hedge global currency exposures such as foreign currency denominated debt, sales, receivables, payables, and purchases. We had no foreign currency cash flow hedges outstanding as of December 31, 2021 and December 31, 2020 and, therefore, no unrealized gains or losses reported under accumulated other comprehensive loss. As of December 31, 2021, we had outstanding Mexican peso, South African rand, euro, Swiss franc and Japanese yen currency contracts, with aggregate notional amounts of $99.3 million. As of December 31, 2020, we had outstanding Mexican peso, South African rand, euro, Swiss franc and Japanese yen currency contracts, with aggregate notional amounts of $71.0 million. The foreign currency derivatives outstanding as of December 31, 2021 had maturity dates from January 2022 to April 2022, and were not designated as hedging instruments. Commodity derivative contracts We have entered into commodity derivative contracts for refined oil products. These contracts are entered into to protect against the risk that eventual cash flows related to these products will be adversely affected by future changes in prices. In the fourth quarter of 2017, we began to enter into LTAs, which are three- to five-year take-or-pay contracts, with many of our customers and began to hedge the cash flows related to these contracts. As of December 31, 2021, we had outstanding commodity derivative contracts with a notional amount of $19.5 million and maturities from January 2022 to June 2022. As of December 31, 2020, we had outstanding commodity derivative contracts with a notional amount of $61.3 million with maturities from January 2021 to June 2022. Within accumulated other comprehensive loss, we had a net unrealized pre-tax gain of $8.5 million and a net unrealized pre-tax loss of $2.2 million as of December 31, 2021 and 2020, respectively. The fair value of these contracts was determined using Level 2 inputs. In connection with de-designated commodity derivative contracts, we recognized no unrealized gains or losses in cost of sales in 2021 and a $0.4 million unrealized gain in 2020 as a result of the variation in fair value from the de-designation date. This resulted from a small portion of our commodity derivative contracts that ceased to qualify for hedge accounting. Interest rate swap contracts During the third quarter of 2019, the Company entered into interest rate swap contracts. The contracts are "pay fixed, receive variable" with notional amounts of $500 million maturing in two years and another $500 million maturing in five years. The Company’s risk management objective was to fix its cash flows associated with the risk in variability in the one-month USD LIBOR for a portion of our outstanding debt. It was expected that these swaps would fix the cash flows associated with the forecasted interest payments on this notional amount of debt to an effective fixed interest rate of 5.1%, which could be lowered to 4.85% depending on credit ratings. In December 2020, in connection with the $500 million principal repayment of the 2018 Term Loan Facility, we de-designated one interest rate swap contract of $250 million notional maturing in the third quarter of 2021, and in February 2021, we closed the contract and recorded a $0.9 million charge in interest expense. Additionally, in February 2021, the Company modified the three remaining swaps with notional amounts of $250 million that matured in the third quarter 2021 and $500 million maturing in the third quarter 2024 in order to align their terms to the amended 2018 Term Loan Facility (see Note 5, "Debt and Liquidity" for details of the February 2021 repricing of the 2018 Term Loan Facility). It is expected that these swaps will fix the cash flows associated with the forecasted interest payments on this notional amount of debt to an effective fixed interest rate of 4.2%, which could be lowered to 3.95% depending on credit ratings. The modification triggered the de-designation and re-designation of the swaps. Because the modified swaps contained an other-than-insignificant financing element at re-designation date, they are considered hybrid instruments composed of a debt host and an embedded derivative and the associated cash (outflows)/inflows are classified as financing (use)/source of cash. The debt host portion amounted to a liability of $7.0 million as of December 31, 2021 with $2.6 million included in "Other accrued liabilities" and $4.4 million in "Other long-term obligations." The corresponding loss is accounted for in "Accumulated other comprehensive loss" and is amortized over the remaining life of the swaps. The embedded derivative is treated as a cash flow hedge. Within accumulated other comprehensive loss, we recorded a net unrealized pre-tax gain of $5.9 million and a net unrealized pre-tax loss of $11.9 million as of December 31, 2021 and 2020, respectively. The fair value of these contracts was determined using Level 2 inputs. The change in the fair value of the de-designated interest rate swap contract from the de-designation date to December 31, 2020, was recorded in interest expense and was immaterial. The fair value of all derivatives is recorded as assets or liabilities on a gross basis in our Consolidated Balance Sheets. At December 31, 2021 and 2020, the fair value of our derivatives and their respective balance sheet locations are presented in the following table:
| Asset Derivatives |  | Liability Derivatives
| Location |  | Fair Value |  | Location |  | Fair Value
As of December 31, 2021 | (Dollars in thousands)
Derivatives designated as cash flow hedges: |  |  |  |  |  |
Commodity derivative contracts | Prepaid and other current assets |  | $ | 8,469 |  |  | Other accrued liabilities |  | $ | — |
| Other assets |  | — |  |  | Other long-term obligations |  | — |
Interest rate swap contracts | Prepaid and other current assets |  | $ | — |  |  | Other accrued liabilities |  | $ | 140 |
| Other assets |  | 6,060 |  |  | Other long-term obligations |  | — |
Total fair value |  |  | $ | 14,529 |  |  |  |  | $ | 140 |
As of December 31, 2020 |  |  |  |  |  |  |
Commodity derivative contracts | Prepaid and other current assets |  | $ | 518 |  |  | Other accrued liabilities |  | $ | 888 |
| Other assets |  | 63 |  |  | Other long-term obligations |  | 1,898 |
Interest rate swap contracts | Prepaid and other current assets |  | $ | — |  |  | Other accrued liabilities |  | $ | 4,080 |
| Other assets |  | — |  |  | Other long-term obligations |  | 6,903 |
Total fair value |  |  | $ | 581 |  |  |  |  | $ | 13,769 |
| Asset Derivatives |  | Liability Derivatives
| Location |  | Fair Value |  | Location |  | Fair Value
As of December 31, 2021 | (Dollars in Thousands)
Derivatives not designated as hedges: |  |  |  |  |  |
Foreign currency derivatives | Prepaid and other current assets |  | $ | 388 |  |  | Other accrued liabilities |  | $ | 2 |
Total fair value |  |  | $ | 388 |  |  |  |  | $ | 2 |
As of December 31, 2020 |  |  |  |  |  |  |
Derivatives not designated as hedges: |  |  |  |  |  |
Foreign currency derivatives | Prepaid and other current assets |  | $ | 6 |  |  | Other accrued liabilities |  | $ | 111 |
Interest rate swap contracts | Prepaid and other current assets |  | — |  |  | Other accrued liabilities |  | 952 |
Total fair value |  |  | $ | 6 |  |  |  |  | $ | 1,063 |
The realized (gains) losses resulting from the settlement of commodity derivative contracts designated as hedges remain in "Accumulated other comprehensive loss" until they are recognized in the Statement of Operations when the hedged item impacts earnings, which is when the finished product is sold. As a result of the settlement of commodity derivative contracts, as of December 31, 2021 and December 31, 2020, net realized pre-tax gain of $11.5 million and net realized pre-tax loss of $7.4 million, respectively, were reported in accumulated other comprehensive income (loss) and will be (were) released to earnings within the following 12 months. See the table below for amounts recognized in the Statement of Operations. The realized (gains) losses on derivatives are recognized in the Statements of Operations when the hedged item impacts earnings and are as follows for the years ended December 31, 2021, 2020 and 2019:
|  |  |  | Amount of (Gain)/Loss Recognized
|  | Location of Realized (Gain)/Loss Recognized in the Consolidated Statement of Operations |  | 2021 |  | 2020 |  | 2019
Derivatives designated as cash flow hedges: |  | (Dollars in thousands)
Commodity derivative contracts |  | Cost of sales |  | $ | 6,440 |  |  | $ | (4,134) |  |  | $ | (8,892) |
Interest rate swaps |  | Interest expense (income) |  | 1,846 |  |  | 4,390 |  |  | (1,050) |
|  |  |  | Amount of (Gain)/Loss Recognized
|  | Location of Realized (Gain)/Loss Recognized in the Consolidated Statement of Operations |  | 2021 |  | 2020 |  | 2019
Derivatives not designated as hedges: |  | (Dollars in thousands)
Foreign currency derivatives |  | Cost of sales, Other (income) expense, net |  | $ | 3,895 |  |  | $ | (2,671) |  |  | $ | (506) |
Commodity derivative contracts |  | Cost of sales |  | (1,399) |  |  | (530) |  |  | (223) |
Interest rate swap contracts |  | Interest expense |  | 866 |  |  | — |  |  | — |
In addition, the loss deferred to "Accumulated other comprehensive loss" in the first quarter of 2021 as a result of the portion of the interest rate swaps qualifying as a debt host is amortized to interest expense over the term of the swaps. The amount of the amortization is as follows for 2021:
|  |  |  | Amount of (Gain)/Loss Recognized
|  | Location of Realized (Gain)/Loss Recognized in the Consolidated Statement of Operations |  | 2021 |  | 2020 |  | 2019
Derivatives not designated as hedges: |  | (Dollars in thousands)
Interest rate swap contracts |  | Interest expense |  | 2,807 |  |  | — |  |  | — |
The balance of the deferred pre-tax loss is $7.0 million as of December 31, 2021, reported in "Accumulated other comprehensive loss", of which $2.6 million will be released to earnings within the next 12 months.

X
- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativesAndFairValueTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

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