DERIVATIVES

12 Months Ended

Dec. 31, 2023

DERIVATIVES

DERIVATIVES

NOTE 14 – DERIVATIVES

The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial for each of the three years in the period ended December 31, 2023.

The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at December 31, 2023. The Company does not expect any counterparties to fail to meet their obligations.

Cash flow hedges

Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $84,148 at December 31, 2023 and $66,296 at December 31, 2022.

The Company has interest rate forward starting swap agreements that are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of the long-term contracts was $100,000 at December 31, 2023 and 2022 and have a termination date of August 2025.

The Company has commodity contracts that are qualified and designated as cash flow hedges. The notional amount of these contracts was 200,000 pounds at December 31, 2023 and 875,000 pounds at December 31, 2022.

In March 2023, the Company entered into interest rate swap agreements, which were qualified and designated as cash flow hedges, with an aggregate notional amount of $150,000. The interest rate swaps will effectively convert the interest rate on $150,000 of the Term Loan discussed in Note 9 from a variable rate based on one-month SOFR to a fixed rate.

Net investment hedges

The Company has foreign currency forward contracts that qualify and are designated as net investment hedges. The dollar equivalent gross notional amount of these short-term contracts was $119,607 at December 31, 2023.

Derivatives not designated as hedging instruments

The Company has certain foreign exchange forward contracts which are not designated as hedges. These derivatives are held as hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $492,600 at December 31, 2023 and $380,443 at December 31, 2022.

Fair values of derivative instruments in the Company’s Consolidated Balance Sheets follow:

	December 31, 2023								December 31, 2022
	Other		Other						Other		Other
	Current		Current		Other		Other		Current		Current		Other		Other
Derivatives by hedge designation	Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities
Designated as hedging instruments:
Foreign exchange contracts	$	1,548	$	687	$	—	$	—	$	1,467	$	738	$	—	$	—
Interest rate swap agreements		—		—		1,460		—		—		—		—		—
Forward starting swap agreements		—		—		20,377		—		—		—		19,291		—
Net investment contracts		—		3,351		—		—		—		2,229		—		—
Commodity contracts		45		—		—		—		181		33		—		—
Not designated as hedging instruments:
Foreign exchange contracts		4,063		623		—		—		2,348		790		—		—
Total derivatives	$	5,656	$	4,661	$	21,837	$	—	$	3,996	$	3,790	$	19,291	$	—

The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following:

		Year Ended December 31,
Derivatives by hedge designation	Classification of gain	2023		2022
Not designated as hedges:
Foreign exchange contracts	Selling, general & administrative expenses	$	15,990	$	4,805

The effects of designated cash flow hedges on AOCI and the Company’s Consolidated Statements of Income consisted of the following:

Total gain recognized in AOCI, net of tax	December 31, 2023		December 31, 2022
Foreign exchange contracts	$	721	$	627
Interest rate swap agreements		1,085		—
Forward starting swap agreements		14,696		13,191
Net investment contracts		7,136		9,440
Commodity contracts		34		91

The Company expects a gain of $755 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized.

		Year Ended December 31,
	Gain (loss) recognized in the
Derivative type	Consolidated Statements of Income:	2023		2022
Foreign exchange contracts	Net Sales	$	5,210	$	962
	Cost of goods sold		590		1,906
Commodity contracts	Cost of goods sold		193		(169)