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Financial Instruments | 9 Months Ended
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Sep. 28, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments | 7. Financial Instruments We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates and commodities used as raw materials in our products. The principal derivative financial instruments we enter into on a routine basis are foreign currency exchange contracts. Derivative financial instruments are recorded at fair value in the consolidated balance sheet and are reflected on a gross basis. We have not entered into any master netting arrangements. The counterparties to derivative contracts are major financial institutions. We are subject to credit risk on these contracts equal to the fair value of these instruments. Management currently believes that the risk of incurring material losses is unlikely. ﻿ Raw materials used by the Company are subject to price volatility caused by weather, supply conditions, geopolitical and economic variables, and other unpredictable external factors. As a result, from time to time, we enter into commodity swaps to manage the price risk associated with forecasted purchases of materials used in our operations. We account for these commodity derivatives as economic hedges or cash flow hedges. Changes in the fair value of economic hedges are immediately recognized in current period earnings. We may be exposed to interest rate risk on existing debt or forecasted debt issuance. To mitigate this risk, we may enter into interest rate hedge contracts. As of September 28, 2024, we had no outstanding interest rate hedges. We may enter into foreign currency forward contracts to protect against foreign exchange risks associated with certain existing assets and liabilities, forecasted future cash flows, and net investments in foreign subsidiaries. Foreign exchange contracts related to forecasted future cash flows correspond to the periods of the forecasted transactions, which generally do not exceed 12 to 15 months subsequent to the latest balance sheet date. Our primary foreign currency hedge contracts perta in to the British pound, the Canadian dollar, the Mexican peso and the Chinese yuan. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at September 28, 2024 was $603.5 m illion. Based on foreign exchange rates as of September 28, 2024, we estimat e that $9.5 million of net derivative gains included in accumulated other comprehensive income as of September 28, 2024 will be reclassified to earnings within the next twelve months. During the second quarter of 2024, we entered into an 18 month cross-currency swap contract to hedge Chinese yuan exposures of the Company's net investment in certain foreign subsidiaries. As of September 28, 2024, the notional value of the cross-currency swap contracts was $125.0 million. The cross-currency swaps were designated as net investment hedges, with the amount of gain or loss associated with the change in fair value of these instruments included within accumulated other comprehensive income and recognized upon termination of the respective investment. For derivative instruments that are designated as fair value hedges, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, are recognized on the same line of the consolidated statements of income. The changes in the fair value of cash flow hedges are reported in accumulated other comprehensive income and are recognized in the consolidated statements of income when the hedged item affects earnings. The fair values of derivative instruments on the consolidated balance sheets as of September 28, 2024 and December 30, 2023 were as follows:
|  |  |  |  | Fair Value |
(In millions) |  | Location |  |  | September 28, 2024 |  |  | December 30, 2023 |
Assets: |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Other current assets |  |  | $ | 1.5 |  |  | $ | 0.8 |
|  | Total assets |  |  | $ | 1.5 |  |  | $ | 0.8 |
Liabilities: |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Other current liabilities |  |  | $ | 2.7 |  |  | $ | 2.7 |
Net investment hedge contracts |  | Other non-current liabilities |  |  |  | 3.3 |  |  |  | - |
|  | Total liabilities |  |  | $ | 6.0 |  |  | $ | 2.7 |
The effects of derivative financial instruments on the statements of comprehensive income for the thirty-nine weeks ended September 28, 2024 and September 30, 2023 were as follows:
(In millions) |  | Classification and Amount of Gain (Loss) Recognized in Income on Hedging Relationships |
|  | Thirty-Nine Weeks Ended September 28, 2024 |
|  | Cost of products sold |  |  | Interest expense |  |  | Other income, net |
Total amounts per Consolidated Statements of Comprehensive Income |  | $ | 1,946.4 |  |  | $ | 92.6 |  |  | $ | 5.2 |
Gain (loss) on fair value hedging relationships |  |  |  |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |
Hedged items |  |  | - |  |  |  | - |  |  |  | 5.0 |
Derivative designated as hedging instruments |  |  | - |  |  |  | - |  |  |  | (6.1 | )
Gain on net investment hedging relationships |  |  | - |  |  |  | - |  |  |  | 1.0 |
Gain (loss) on cash flow hedging relationships |  |  |  |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | 0.4 |  |  |  | - |  |  |  | - |
Commodity contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | - |  |  |  | - |  |  |  | - |
Interest rate contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | - |  |  |  | 9.4 |  |  |  | - |
(In millions) |  | Classification and Amount of Gain (Loss) Recognized in Income on Hedging Relationships |
|  | Thirty-Nine Weeks Ended September 30, 2023 |
|  | Cost of products sold |  |  | Interest expense |  |  | Other income, net |
Total amounts per Consolidated Statements of Comprehensive Income |  | $ | 2,048.4 |  |  | $ | 87.9 |  |  | $ | 20.9 |
Gain (loss) on fair value hedging relationships |  |  |  |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |
Hedged items |  |  | - |  |  |  | - |  |  |  | 1.4 |
Derivative designated as hedging instruments |  |  | - |  |  |  | - |  |  |  | 0.4 |
Gain (loss) on cash flow hedging relationships |  |  |  |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | 4.1 |  |  |  | - |  |  |  | - |
Commodity contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | (0.2 | ) |  |  | - |  |  |  | - |
Interest rate contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | - |  |  |  | 5.8 |  |  |  | - |
The effects of derivative financial instruments on the statements of comprehensive income for the thirteen weeks ended September 28, 2024 were as follows:
(In millions) |  | Classification and Amount of Gain (Loss) Recognized in Income on Hedging Relationships |
|  | Thirteen Weeks Ended September 28, 2024 |
|  | Cost of products sold |  |  | Interest expense |  |  | Other income, net |
Total amounts per Consolidated Statements of Comprehensive Income |  | $ | 625.5 |  |  | $ | 30.2 |  |  | $ | 1.6 |
Gain (loss) on fair value hedging relationships |  |  |  |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |
Hedged items |  |  | - |  |  |  | - |  |  |  | 3.1 |
Derivative designated as hedging instruments |  |  | - |  |  |  | - |  |  |  | (3.3 | )
Gain on net investment hedging relationships |  |  | - |  |  |  | - |  |  |  | 0.7 |
Gain (loss) on cash flow hedging relationships |  |  |  |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | - |  |  |  | - |  |  |  | - |
Commodity contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | - |  |  |  | - |  |  |  | - |
Interest rate contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | - |  |  |  | 3.1 |  |  |  | - |
(In millions) |  | Classification and Amount of Gain (Loss) Recognized in Income on Hedging Relationships |
|  | Thirteen Weeks Ended September 30, 2023 |
|  | Cost of products sold |  |  | Interest expense |  |  | Other income, net |
Total amounts per Consolidated Statements of Comprehensive Income |  | $ | 721.1 |  |  | $ | 33.3 |  |  | $ | 9.4 |
Gain (loss) on fair value hedging relationships |  |  |  |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |
Hedged items |  |  | - |  |  |  | - |  |  |  | (3.0 | )
Derivative designated as hedging instruments |  |  | - |  |  |  | - |  |  |  | 3.3 |
Gain (loss) on cash flow hedging relationships |  |  |  |  |  |  |  |  |
Foreign exchange contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | 0.1 |  |  |  | - |  |  |  | - |
Commodity contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | (0.1 | ) |  |  | - |  |  |  | - |
Interest rate contracts: |  |  |  |  |  |  |  |  |
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |  |  | - |  |  |  | 3.2 |  |  |  | - |

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