Financial Instruments

9 Months Ended

Oct. 01, 2021

Investments, All Other Investments [Abstract]

Note 12: Financial Instruments

Foreign Currencies

As a multinational business, the Company engages in transactions that are denominated in a variety of currencies. When appropriate, the Company uses forward foreign currency contracts to reduce its overall exposure to the effects of currency fluctuations on its results of operations and cash flows. The Company’s policy prohibits trading in currencies for which there are no underlying exposures and entering into trades for any currency to intentionally increase the underlying exposure. The Company primarily hedges existing assets and liabilities associated with transactions currently on its balance sheet, which are undesignated hedges for accounting purposes.

As of October 1, 2021 and December 31, 2020, the Company had net outstanding foreign exchange contracts with notional amounts of $301.2 million and $263.4 million, respectively. Such contracts were obtained through financial institutions and were scheduled to mature within one to three months from the time of purchase. Management believes that these financial instruments should not subject the Company to increased risks from foreign exchange movements because gains and losses on these contracts should offset losses and gains on the underlying assets, liabilities and transactions to which they are related.

The following summarizes the Company’s net foreign exchange positions in U.S. Dollars (in millions):


	As of
	October 1, 2021				December 31, 2020
	Buy (Sell)		Notional Amount		Buy (Sell)		Notional Amount
Euro	$	75.9	$	75.9	$	47.7	$	47.7
Philippine Peso	66.8		66.8		57.2		57.2
Japanese Yen	56.2		56.2		71.2		71.2
Korean Won	36.5		36.5		34.4		34.4
Chinese Yuan	24.3		24.3		17.7		17.7
Malaysian Ringgit	14.0		14.0		11.7		11.7

Singapore Dollar	11.7		11.7		5.7		5.7
Other Currencies - Buy	9.0		9.0		6.7		6.7
Other Currencies - Sell	(6.8)		6.8		(11.1)		11.1
	$	287.6	$	301.2	$	241.2	$	263.4

Amounts receivable or payable under the contracts are included in other current assets or accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets. During the quarters ended October 1, 2021 and October 2, 2020,

realized and unrealized foreign currency transactions totaled a loss of $0.8 million and a gain of $0.1 million, respectively. During the nine months ended October 1, 2021 and October 2, 2020, realized and unrealized foreign currency transactions totaled a gain of $1.5 million and a loss of $3.4 million, respectively. The realized and unrealized foreign currency transactions are included in other income (expense) in the Company's Consolidated Statements of Operations and Comprehensive Income.

Cash Flow Hedges

All derivatives are recognized on the Company’s Consolidated Balance Sheets at their fair value and classified based on the applicable instrument's maturity date.

Foreign Currency Risk

The purpose of the foreign currency hedging activities is to protect the Company from the risk that the eventual cash flows resulting from transactions in foreign currencies will be adversely affected by changes in exchange rates. During the quarter ended July 2, 2021, the Company entered into an insignificant forward contract that is designated as a foreign currency cash flow hedge of a forecasted payment denominated in a currency other than U.S. Dollars.

Interest Rate Risk

The Company uses interest rate swap contracts to mitigate its exposure to interest rate fluctuations. During the quarter ended July 2, 2021, the Company entered into interest rate swap agreements for notional amounts totaling $500.0 million, effective as of December 30, 2022 and December 29, 2023, with maturity dates of December 29, 2023 and December 31, 2024, respectively.

The Company did not identify any ineffectiveness with respect to the notional amounts of the interest rate swap contracts effective as of October 1, 2021 and October 2, 2020, amounting to $1.5 billion and $2.25 billion, respectively.

Other

As of October 1, 2021, the Company had no outstanding commodity derivatives, currency swaps or options relating to either its debt instruments or investments. The Company does not hedge the value of its equity investments in its subsidiaries or affiliated companies. The Company is exposed to credit-related losses if counterparties to hedge contracts fail to perform their obligations. As of October 1, 2021, the counterparties to the Company’s hedge contracts were held at financial institutions that the Company believes to be highly-rated, and no credit-related losses are anticipated.