We utilize derivative financial instruments to manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative instruments include interest rate risk, foreign currency exchange rate risk and commodity price risk. While certain of our derivative instruments are designated as hedging instruments, we also enter into derivative instruments that are designed to hedge a risk, but are not designated as hedging instruments and, therefore, do not qualify for hedge accounting. These derivative instruments are adjusted to current fair value through earnings (loss) at the end of each period.

Interest Rate Risk Management – We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps and treasury locks to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.

Foreign Currency Exchange Rate Risk Management – We conduct business in several major international currencies and are, therefore, subject to risks associated with changing foreign currency exchange rates. We enter into various contracts that change in value as foreign currency exchange rates change to manage this exposure. Such contracts limit exposure to both favorable and unfavorable foreign currency exchange rate fluctuations. The translation of foreign currencies into U.S. dollars also subjects us to exposure related to fluctuating foreign currency exchange rates; however, derivative instruments are not used to manage this risk.

Commodity Price Risk Management – We are exposed to changes in the price of certain commodities, including steel, natural gas, zinc and other raw materials, and our utility requirements. Our objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, we enter into derivative contracts to manage the associated price risk.

We are exposed to counterparty credit risk on all of our derivative instruments. Accordingly, we have established and maintain strict counterparty credit guidelines. We have credit support agreements in place with certain counterparties to limit our credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in which the cumulative market position falls below the required threshold. We do not have significant exposure to any one counterparty, and management believes the risk of loss is remote and, in any event, would not be material.

Refer to "NOTE R – Fair Value" for additional information regarding the accounting treatment for our derivative instruments, as well as how fair value is determined.

The following table summarizes the fair value of our derivative instruments and the respective lines in which they were recorded in the consolidated balance sheet at November 30, 2019:

	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
(in thousands)	Location	Value		Location	Value
Derivatives designated as hedging instruments:
Commodity contracts	Receivables	$	9	Accounts payable	$	4,569
	Other assets		-	Other liabilities		451
Totals		$	9		$	5,020

Derivatives not designated as hedging instruments:
Commodity contracts	Receivables	$	953	Accounts payable	$	1,487
	Other assets		7	Other liabilities		223
			960			1,710
Foreign currency exchange contracts	Receivables		-	Accounts payable		75
Totals		$	960		$	1,785
Total derivative instruments		$	969		$	6,805

The amounts in the table above reflect the fair value of the Company’s derivative instruments on a net basis at November 30, 2019. Had these amounts been recognized on a gross basis, the impact would have been a $581,000 increase in receivables with a corresponding increase in accounts payable.

The following table summarizes the fair value of our derivative instruments and the respective lines in which they were recorded in the consolidated balance sheet at May 31, 2019:

	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
(in thousands)	Location	Value		Location	Value
Derivatives designated as hedging instruments:
Commodity contracts	Receivables	$	5	Accounts payable	$	8,383
	Other assets		-	Other liabilities		201
Totals		$	5		$	8,584

Derivatives not designated as hedging instruments:
Commodity contracts	Receivables	$	2,347	Accounts payable	$	3,568
	Other assets		62	Other liabilities		66
			2,409			3,634
Foreign currency exchange contracts	Receivables		-	Accounts payable		20
Totals		$	2,409		$	3,654
Total derivative instruments		$	2,414		$	12,238

The amounts in the table above reflect the fair value of the Company’s derivative instruments on a net basis at May 31, 2019. Had these amounts been recognized on a gross basis, the impact would have been a $220,000 increase in receivables with a corresponding increase in accounts payable.

We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to commodity price fluctuations associated with certain forecasted transactions. These derivative instruments are designated and qualify as cash flow hedges. The earnings effects of these derivative instruments are presented in the same statement of earnings line items as the earnings effects of the hedged items. For derivatives designated as cash flow hedges, the Company assesses hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative instrument.

The following table summarizes our cash flow hedges outstanding at November 30, 2019:

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from AOCI into net earnings for derivative instruments designated as cash flow hedges for the periods presented:

	Gain (Loss)			Location of Gain (Loss)	Gain (Loss) Reclassified
(in thousands)	Recognized in OCI			Reclassified from AOCI into Net Earnings	from AOCI into Net Earnings
For the three months ended November 30, 2019:
Commodity contracts	$	10		Cost of goods sold	$	(4,228	)
Interest rate contracts		(326	)	Interest expense		(7	)
Foreign currency exchange contracts		-		Miscellaneous income, net		(97	)
Totals	$	(316	)		$	(4,332	)

For the three months ended November 30, 2018:
Commodity contracts	$	(4,499	)	Cost of goods sold	$	1,565
Interest rate contracts		-		Interest expense		(34	)
Foreign currency exchange contracts		-		Miscellaneous income, net		36
Totals	$	(4,499	)		$	1,567

For the six months ended November 30, 2019:
Commodity contracts	$	(5,649	)	Cost of goods sold	$	(6,520	)
Interest rate contracts		(326	)	Interest expense		(127	)
Foreign currency exchange contracts		-		Miscellaneous income, net		(19	)
Totals	$	(5,975	)		$	(6,666	)

For the six months ended November 30, 2018:
Commodity contracts	$	(4,530	)	Cost of goods sold	$	4,108
Interest rate contracts		-		Interest expense		(81	)
Foreign currency exchange contracts		-		Miscellaneous income, net		36
Totals	$	(4,530	)		$	4,063

The estimated net amount of the losses recognized in AOCI at November 30, 2019 expected to be reclassified into net earnings within the succeeding twelve months is $5,916,000 (net of tax of $1,863,000). This amount was computed using the fair value of the cash flow hedges at November 30, 2019, and will change before actual reclassification from OCI to net earnings during the fiscal years ending May 31, 2020 and May 31, 2021.

We enter into foreign currency exchange contracts to manage our foreign currency exchange rate exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative instruments are adjusted to current market value at the end of each period through net earnings.

The following table summarizes our economic (non-designated) derivative instruments outstanding at November 30, 2019:

The following tables summarize the gain (loss) recognized in net earnings for economic (non-designated) derivative financial instruments for the periods presented:

		Gain (Loss) Recognized
		In Net Earnings for the
	Location of Gain (Loss)	Three Months Ended November 30,
(in thousands)	Recognized in Net Earnings	2019			2018
Commodity contracts	Cost of goods sold	$	(1,673	)	$	(737	)
Foreign currency exchange contracts	Miscellaneous income, net		15			(1,183	)
Total		$	(1,658	)	$	(1,920	)

		Loss Recognized
		in Net Earnings for the
	Location of Loss	Six Months Ended November 30,
(in thousands)	Recognized in Net Earnings	2019			2018
Commodity contracts	Cost of goods sold	$	(3,916	)	$	(2,934	)
Foreign currency exchange contracts	Miscellaneous income, net		(89	)		(2,689	)
Total		$	(4,005	)	$	(5,623	)