Derivative Financial Instruments

9 Months Ended

Sep. 30, 2022

Derivative Instruments And Hedging Activities Disclosure [Abstract]

NOTE 4 - DERIVATIVE FINANCIAL INSTRUMENTS

We use derivatives to partially offset our exposure to foreign currency, interest rate, aluminum and other commodity price risks. We may enter into forward contracts, option contracts, swaps, collars or other derivative instruments to offset some of the risk on expected future cash flows and on certain existing assets and liabilities. However, we may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will fully offset the financial impact resulting from movements in foreign currency exchange rates, interest rates, and aluminum or other commodity prices.

To help mitigate gross margin fluctuations due to changes in foreign currency exchange rates, certain of our subsidiaries, whose functional currency is the U.S. dollar or the Euro, hedge a portion of their forecasted foreign currency costs denominated in the Mexican Peso and Polish Zloty, respectively. We may hedge portions of our forecasted foreign currency exposure up to 48 months.

We account for our derivative instruments as either assets or liabilities and adjust them to fair value each period. For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the gain or loss on the derivative instrument is recorded in accumulated other comprehensive income (“AOCI”) or loss in shareholders’ equity or deficit until the hedged item is recognized in earnings, at which point accumulated gains or losses are recognized in earnings and

classified with the underlying hedged transaction. Derivatives that do not qualify or have not been designated as hedges are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.

The following tables display the fair value of derivatives by balance sheet line item at September 30, 2022 and December 31, 2021:


	September 30, 2022
	Other Current Assets		Other Non-current Assets		Accrued Liabilities		Other Non-current Liabilities
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	7,195	$	6,864	$	6,219	$	14,506
Foreign exchange forward contracts not designated as hedging instruments		181		—		565		—
Aluminum forward contracts designated as hedging instruments		—		—		2,081		—
Natural gas forward contracts designated as hedging instruments		1,552		1,861		161		78
Interest rate swap contracts designated as hedging instruments		2,654		3,080		—		—
Total derivative financial instruments	$	11,582	$	11,805	$	9,026	$	14,584


	December 31, 2021
	Other Current Assets		Other Non-current Assets		Accrued Liabilities		Other Non-current Liabilities
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	3,161	$	2,194	$	1,845	$	13,565
Foreign exchange forward contracts not designated as hedging instruments		579		—		3		—
Aluminum forward contracts designated as hedging instruments		2,677		39		—		—
Natural gas forward contracts designated as hedging instruments		1,294		418		135		276
Interest rate swap contracts designated as hedging instruments		—		—		3,887		—
Total derivative financial instruments	$	7,711	$	2,651	$	5,870	$	13,841

The following table summarizes the notional amount and estimated fair value of our derivative financial instruments:


	September 30, 2022					December 31, 2021
	Notional U.S. Dollar Amount		Fair Value			Notional U.S. Dollar Amount		Fair Value
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	482,559	$	(6,666	)	$	458,769	$	(10,055	)
Foreign exchange forward contracts not designated as hedging instruments		22,219		(384	)		24,419		576
Aluminum forward contracts designated as hedging instruments		16,049		(2,081	)		37,609		2,716
Natural gas forward contracts designated as hedging instruments		12,148		3,174			8,915		1,301
Interest rate swap contracts designated as hedging instruments		400,000		5,734			200,000		(3,887	)
Total derivative financial instruments	$	932,975	$	(223	)	$	729,712	$	(9,349	)

Notional amounts are presented on a net basis. The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates or commodity prices.

The following tables summarize the gain or loss recognized in AOCI, the amounts reclassified from AOCI into earnings and the amounts recognized directly into earnings for the three and nine months ended September 30, 2022 and 2021:


Three Months Ended September 30, 2022	Amount of Gain or (Loss) Recognized in AOCI on Derivatives		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts	$	7,091	$	2,578	$	(157	)

Nine Months Ended September 30, 2022	Amount of Gain or (Loss) Recognized in AOCI on Derivatives		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts	$	8,329	$	11,913	$	512


Three Months Ended September 30, 2021	Amount of Gain or (Loss) Recognized in AOCI on Derivatives			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts	$	(6,884	)	$	1,731	$	(219	)

Nine Months Ended September 30, 2021	Amount of Gain or (Loss) Recognized in AOCI on Derivatives			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts	$	101		$	2,050	$	(1,485	)