Financial instruments

3 Months Ended

Mar. 28, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Foreign currency forward contracts

We use derivative instruments for risk management purposes. Foreign currency forward contracts designated as cash flow hedges are used to manage foreign currency transaction exposure. Foreign currency forward contracts not designated as hedges for accounting purposes are used to manage exposure related to near term foreign currency denominated monetary assets and liabilities. We enter into the non-designated foreign currency forward contracts for periods consistent with our currency translation exposures, which generally approximate one month. For the three months ended March 28, 2021 we recognized a loss of $3.2 million related to non-designated foreign currency forward contracts. For the three months ended March 29, 2020 we recognized a gain of $1.6 million related to non-designated foreign currency forward contracts.

The total notional amount for all open foreign currency forward contracts designated as cash flow hedges as of March 28, 2021 and December 31, 2020 was $131.2 million and $129.5 million, respectively. The total notional amount for all open non-designated foreign currency forward contracts as of March 28, 2021 and December 31, 2020 was $191.3 million and $163.5 million, respectively. All open foreign currency forward contracts as of March 28, 2021 have durations of 12 months or less.

Cross-currency interest rate swaps

During 2019, we entered into cross-currency swap agreements with five different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Under the terms of the cross-currency swap agreements, we have notionally exchanged $250 million at an annual interest rate of 4.875% for €219.2 million at an annual interest rate of 2.4595%. The swap agreements are designed as net investment hedges and expire on March 4, 2024.

During 2018, we entered into cross-currency swap agreements with six different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Under the terms of the cross-currency swap agreements, we have notionally exchanged $500 million at an annual interest rate of 4.625% for €433.9 million at an annual interest rate of 1.942%. The swap agreements are designed as net investment hedges and expire on October 4, 2023.

The swap agreements described above require an exchange of the notional amounts upon expiration or earlier termination of the agreements. We and the counterparties have agreed to effect the exchange through a net settlement.

The cross-currency swaps are marked to market at each reporting date and any changes in fair value are recognized as a component of accumulated other comprehensive income (loss) ("AOCI"). For the three months ended March 28, 2021 and March 29, 2020, we recognized foreign exchange gains of $17.6 million and $25.0 million, respectively, within AOCI related to the cross-currency swaps. For the three months ended March 28, 2021 and March 29, 2020, we recognized $4.6 million and $4.9 million, respectively, in interest benefit related to the cross-currency swaps.

Balance sheet presentation

The following table presents the locations in the condensed consolidated balance sheet and fair value of derivative financial instruments as of March 28, 2021 and December 31, 2020:


	March 28, 2021		December 31, 2020

Asset derivatives:
Designated foreign currency forward contracts	$	1,098	$	1,691
Non-designated foreign currency forward contracts	212		61
Cross-currency interest rate swaps	25,575		20,106
Prepaid expenses and other current assets	26,885		21,858


Total asset derivatives	$	26,885	$	21,858
Liability derivatives:
Designated foreign currency forward contracts	$	1,706	$	1,504
Non-designated foreign currency forward contracts	216		366
Other current liabilities	1,922		1,870
Cross-currency interest rate swaps	12,054		34,125
Other liabilities	12,054		34,125
Total liability derivatives	$	13,976	$	35,995

See Note 10 for information on the location and amount of gains and losses attributable to derivatives that were reclassified from AOCI to expense (income), net of tax.

There was no ineffectiveness related to our cash flow hedges during the three months ended March 28, 2021 and March 29, 2020.

Trade receivables The allowance for credit losses as of March 28, 2021 and December 31, 2020 was $12.0 million and $12.9 million, respectively. The current portion of the allowance for credit losses, which was $7.4 million and $8.1 million as of March 28, 2021 and December 31, 2020, respectively, was recognized as a reduction of accounts receivable, net.