Quarterly report [Sections 13 or 15(d)]

Derivative Instruments & Hedging Activities

v3.25.3
Derivative Instruments & Hedging Activities
 9 Months Ended
Sep. 27, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS & HEDGING ACTIVITIES

8. DERIVATIVE INSTRUMENTS & HEDGING ACTIVITIES

The Company addresses certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments and hedging activities.

The fair value of the Company's derivative financial instruments included in the Consolidated Balance Sheets is presented as follows:

 

 

Asset Derivatives

 

 

Liability Derivatives

 

 

Balance Sheet

 

Fair Value (1)

 

Fair Value (1)

 

 

Balance Sheet

 

Fair Value (1)

 

Fair Value (1)

 

 

Location

 

September 27, 2025

 

December 28, 2024

 

 

Location

 

September 27, 2025

 

December 28, 2024

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

Interest rate swap contracts

Other assets

 

$

—

 

$

—

 

 

Other non-current liabilities

 

$

—

 

$

—

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

Forward foreign exchange contracts

Other current assets

 

 

—

 

$

—

 

 

Other current liabilities

 

 

0.5

 

 

—

 

Forward foreign exchange contracts

Other assets

 

 

—

 

$

—

 

 

Other non-current liabilities

 

 

—

 

 

—

 

Total derivatives

 

 

$

—

 

$

—

 

 

 

 

$

0.5

 

$

—

 

(1) See Note 4 for information regarding the inputs used in determining the fair value of derivative assets and liabilities.

 

The amount of gains and losses related to the Company’s derivative financial instruments for the nine months ended September 27, 2025, and September 28, 2024, are presented as follows:

 

 

Amount of Gain or (Loss) Recognized in
Other Comprehensive Income on Derivatives
(Effective Portion)

 

 

Location of Gain or (Loss)
Reclassified from
Accumulated Other
Comprehensive Income

Amount of Gain or (Loss) Reclassified from
Accumulated Other Comprehensive Income
into Earnings (Effective Portion)

 

 

 

September 27, 2025

 

September 28, 2024

 

 

into Earnings
(Effective Portion)

 

September 27, 2025

 

September 28, 2024

 

Derivatives in cash flow hedging relationships:

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

—

 

$

0.5

 

 

Interest expense, net

 

$

—

 

$

3.6

 

Interest expense presented in the Consolidated Statements of Operations, in which the effects of cash flow hedges are recorded, totaled $21.3 and $25.7 for the nine months ended September 27, 2025, and September 28, 2024, respectively.

 

 

 

Amount of Gain or (Loss) Recognized
in Earnings on Derivatives

 

 

Location of Gain or (Loss) Recognized

 

 

September 27, 2025

 

September 28, 2024

 

 

in Earnings on Derivatives

Derivatives not designated as hedging instruments:

 

 

 

Forward foreign exchange contracts

 

$

(0.5

)

$

—

 

 

Foreign currency transaction gain / loss, net

 

Interest Rate Swap Contracts

The Company primarily utilizes variable-rate debt, which exposes the Company to variability in interest payments. The Company enters into various types of derivative instruments to manage fluctuations in cash flows resulting from interest rate risk attributable to changes in the benchmark interest rates.

The Company assesses interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.

The Company maintains risk management control systems to monitor interest rate cash flow risk attributable to both the Company’s outstanding and forecasted debt obligations as well as the Company’s offsetting hedge positions. The risk management control systems involve the use of analytical techniques to estimate the expected impact of changes in interest rates on the Company’s future cash flows.

Previously, the Company had entered into interest rate swap transactions to hedge the variable interest rate payments on its credit facilities. In connection with these transactions, the Company paid interest based upon a fixed rate as agreed upon with the respective counterparties and received variable rate interest payments. The interest rate swaps were designated as hedging instruments and were accounted for as cash flow hedges. The interest rate swap contracts were terminated on June 25, 2024, and at September 27, 2025 and September 28, 2024, the Company had no active interest rate swap contracts.

Foreign Currency Forward Contracts

The Company from time to time has entered into forward contracts to economically hedge translational and transactional exposure associated with various business units whose local currency differs from the Company’s reporting currency. The Company’s forward contracts are not designated as hedging instruments for accounting purposes.

At September 27, 2025, the Company had one forward foreign exchange contract with an aggregate notional value of $55 AUD, maturing on October 1, 2025.

Net Investment Hedge

The Company utilizes foreign currency denominated debt to hedge currency exposure in foreign operations. The Company has designated €90.0 of borrowings on the revolving credit facility as a net investment hedge of a portion of the Company’s European operations. The carrying value of the euro denominated debt totaled $105.4 as of September 27, 2025, and is included in the Revolving lines of credit line item in the Consolidated Balance Sheets. The gain on the net investment hedge recorded in AOCI as part of the currency translation adjustment was $8.5, net of tax, for the nine months ended September 27, 2025.