XML 31 R20.htm IDEA: XBRL DOCUMENT
v3.24.1.u1

Derivative Instruments and Hedging Activities | 3 Months Ended
--- | ---
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company's primary exposure to market risk relates to changes in foreign currency exchange rates and interest rates. The Company’s primary foreign currency risk management objective is to protect the U.S. dollar value of future cash flows and minimize the volatility of reported earnings. The Company does not use foreign currency forward contracts for speculative or trading purposes. The Company mitigates exposure to foreign currency exchange rates and interest rates primarily through the following:
Mitigation Approach | Quantitative Information on Approach |  |  |
The Company utilizes foreign currency forward contracts to reduce the volatility of cash flows primarily related to forecasted revenue and expenses denominated in Canadian dollars for our Canadian companies, and in British pounds for our U.K. companies. These contracts are designated and qualify as cash flow hedges. | As of March 31, 2024, the Company had foreign currency forward contracts to buy Canadian dollars and to sell U.S. dollars totaling $131.3 million. These foreign currency forward contracts have maturities ranging from June 2024 to February 2026. As of March 31, 2024, the Company had foreign currency forward contracts to buy British pounds and to sell U.S. dollars totaling $12.7 million. These foreign currency forward contracts have maturities ranging from June 2024 to February 2025. |  |  |
The Company utilizes foreign currency forward contracts to mitigate foreign exchange rate risk associated with foreign currency denominated monetary assets and liabilities, including intercompany receivables and payables. These foreign currency forward contracts are not designated as accounting hedges. | See Non-Designated Hedging Activities section below. |  |  |
The Company has converted a U.S. dollar denominated, variable rate debt obligation of a European subsidiary into euro fixed rate obligation using a receive float, pay fixed cross currency swap to reduce the variability of interest rates. This cross currency swap is designated as cash flow hedge. | As of March 31, 2024, the Company has a cross currency swap outstanding with a notional amount of €156.0 million and $150.0 million that matures in October 2024. |  |  |
All derivative instruments are recorded on the condensed consolidated balance sheets at fair value. The accounting for gains and losses resulting from changes in fair value depends on the use of the derivative instrument and whether it is designated and qualifies for hedge accounting. Designated Hedging Activities For a derivative instrument designated as an accounting hedge of an anticipated transaction (a cash flow hedge), the change in the fair value is recorded on the condensed consolidated balance sheets in AOCI to the extent the derivative instrument is effective in mitigating the exposure related to the anticipated transaction. The amount recorded within AOCI is reclassified into earnings in the same period during which the underlying hedged transaction affects earnings. The effect of derivative instruments designated as cash flow hedges in the condensed consolidated financial statements for the first quarter ended March 31, 2024 and April 2, 2023 was as follows (in millions):
| First Quarter |  |
| 2024 |  | 2023 |  |  |  |
Net gain (loss) recognized in AOCI - Foreign Exchange Contracts (a) | $ | 0.7 |  |  | $ | 13.6 |  |  |  |  |
Net gain (loss) reclassified from AOCI into revenue - Foreign Exchange Contracts (a) | $ | 0.7 |  |  | $ | (1.9) |  |  |  |  |
Net gain (loss) reclassified from AOCI into other income and expense, net - Foreign Exchange Contracts (b) | $ | 3.7 |  |  | $ | 10.1 |  |  |  |  |
Net gain (loss) reclassified from AOCI into interest expense - Foreign Exchange Contracts | $ | 1.9 |  |  | $ | 1.5 |  |  |  |  |
Net gain (loss) reclassified from AOCI into interest expense - Interest Rate Contracts | $ | — |  |  | $ | 0.6 |  |  |  |  |
(a) Effective portion, pre-tax (b) Amount reclassified to offset earnings impact of liability hedged by cross currency swap Net deferred gains recorded in AOCI for the forward contracts that will mature in the next twelve months total $1.0 million, net of taxes. These gains are expected to be offset by anticipated losses in the value of the forecasted underlying hedged item. Amounts related to the cross currency swap expected to be reclassified from AOCI into income in the next twelve months total $3.5 million. Non-Designated Hedging Activities For a derivative instrument that has not been designated as an accounting hedge, the change in the fair value is recognized immediately in earnings. As of March 31, 2024, the Company had foreign currency forward contracts not designated as accounting hedges primarily in the following types and pairs (in millions):
Contracts to Buy |  | Contracts to Sell
Currency |  | Amount |  | Currency |  | Amount
Canadian Dollars |  | $ | 301.2 |  |  | U.S. Dollars |  | US$ | 222.1 |
Canadian Dollars |  | $ | 12.6 |  |  | Euros |  | € | 8.6 |
Danish Krone |  | DKR | 154.8 |  |  | U.S. Dollars |  | US$ | 22.5 |
Great Britain Pounds |  | £ | 5.3 |  |  | Euros |  | € | 6.2 |
Great Britain Pounds |  | £ | 70.4 |  |  | U.S. Dollars |  | US$ | 88.9 |
U.S. Dollars |  | US$ | 17.0 |  |  | Euros |  | € | 15.8 |
Norwegian Krone |  | kr | 179.0 |  |  | U.S. Dollars |  | US$ | 16.9 |
Swedish Krona |  | SEK | 284.3 |  |  | Euros |  | € | 26.1 |
Swedish Krona |  | SEK | 310.4 |  |  | U.S. Dollars |  | US$ | 29.3 |
The preceding table includes non-designated hedges derived from terms contained in previously designated cash flow hedges. The gains and losses on these derivatives instruments which are not designated as accounting hedges are intended to, at a minimum, partially offset the transaction gains and losses recognized in earnings. The effect of derivative instruments not designated as accounting hedges recognized in other income and expense for the first quarter ended March 31, 2024 was expense of $9.3 million. The effect of derivative instruments not designated as accounting hedges in other income and expense for the first quarter ended April 2, 2023 was income of $7.8 million. The income or expense was largely offset by losses or gains in the value of the underlying hedged item excluding the impact of forward points. Fair Value of Derivative Financial Instruments The fair values of the Company’s derivative instruments are presented below. All fair values for these derivative instruments were measured using Level 2 inputs in the fair value hierarchy (in millions):
Asset/(Liability) Derivative Instruments | Balance sheet location |  | March 31, 2024 |  | December 31, 2023
Derivatives designated as hedging instruments: |  |  |  |  |
Cash flow forward contracts | Other current assets |  | $ | 1.2 |  |  | $ | 3.7 |
Cash flow forward contracts | Other non-current assets |  | 0.6 |  |  | 2.4 |
Interest rate contracts | Other current assets (accrued interest) |  | 0.1 |  |  | 0.1 |
Cash flow cross currency swap | Other current assets |  | (17.3) |  |  | (21.3) |
Total derivatives designated as hedging instruments |  |  | (15.4) |  |  | (15.1) |
Derivatives not designated as hedging instruments: |  |  |  |  |
Non-designated forward contracts | Other current assets |  | 1.5 |  |  | 14.2 |
Non-designated forward contracts | Accrued liabilities |  | (3.3) |  |  | (3.2) |
Total derivatives not designated as hedging instruments |  |  | (1.8) |  |  | 11.0 |
Total derivative instruments, net |  |  | $ | (17.2) |  |  | $ | (4.1) |

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

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration