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Financial instruments | 6 Months Ended
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Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial instruments | Financial instruments 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 and six months ended June 30, 2024, we recognized a loss of $0.1 million and a gain of $3.5 million respectively, related to non-designated foreign currency forward contracts. For the three and six months ended July 2, 2023, we recognized gains of $2.0 million and $2.1 million, respectively, 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 June 30, 2024 and December 31, 2023 was $302.2 million and $234.1 million, respectively. The total notional amount for all open non-designated foreign currency forward contracts as of June 30, 2024 and December 31, 2023 was $173.4 million and $195.0 million, respectively. All open foreign currency forward contracts as of June 30, 2024 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 (the "2019 Cross-currency swaps"). Under the terms of the cross-currency swap agreements, we notionally exchanged $250 million at an annual interest rate of 4.88% for €219.2 million at an annual interest rate of 2.46%. The swap agreements are designed as net investment hedges. On February 26, 2024, the agreements related to our 2019 Cross-currency swap with an original maturity date of March 4, 2024 were terminated resulting in $12.1 million in cash settlement proceeds. On February 26, 2024, we executed two separate term cross-currency swap agreements set to expire on February 26, 2027 and February 28, 2029, respectively, to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Each of the swap agreements had a notional principal amount of $250 million and were designated as a net investment hedge. On April 25, 2024, the cross-currency agreements executed in February 2024 were terminated in response to changes in market conditions, resulting in $0.4 million in a cash settlement payment and we simultaneously executed two new separate term cross-currency swap agreements with the same expiration dates and notional values (together, the "2024 Cross-currency swap agreements"). The cross-currency swap agreements expiring in 2027 include five different financial institution counterparties and notionally exchanged $250 million at an annual interest rate of 4.25% for €233.4 million at an annual interest rate of 2.44%. The cross-currency swap agreements expiring in 2029 include four different financial institution counterparties and notionally exchanged $250 million at an annual interest rate of 4.25% for €233.4 million at an annual interest rate of 2.45%. Both of the 2024 Cross-currency swap agreements are designated as a net investment hedge. During 2023, we executed 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, (the "2023 Cross-currency swaps"). Under the terms of the cross-currency swap agreements, we have notionally exchanged $500 million at an annual interest rate of 4.63% for €474.7 million at an annual interest rate of 3.05%. The swap agreements are designated as net investment hedges and expire on October 4, 2025. In 2023, we entered into a zero cost foreign exchange collar contract that aligns with the notional amount and expiration date of the 2023 Cross-currency swaps. We sold a put option with a lower strike price and bought a call option with a higher strike price to manage the foreign exchange risk related to the final settlement of the $500 million notional cross currency swaps. Upon the execution of the zero cost foreign exchange collar contract, we have de-designated the 2023 Cross-currency swaps and re-designated the combined $500 million notional cross currency swaps and zero cost collar into a new hedging instrument. At redesignation, the existing $500 million notional cross-currency swaps were off-market due to changes in foreign exchange rates and interest rates. The off-market value due to interest rates will be amortized ratably into earnings through October 2025 and the off-market value due to foreign exchange rates will remain in accumulated other comprehensive income until the underlying net investment is sold. The combined cross-currency swaps and zero cost collar have been designated as a net investment hedge for accounting purposes. 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"). The following table summarizes the foreign exchange gains and losses recognized within AOCI and the interest benefit recognized within interest expense related to cross currency swap for the three and six months ended June 30, 2024 and July 2, 2023:
| Three Months Ended |  | Six Months Ended |  |
| June 30, 2024 |  | July 2, 2023 |  | June 30, 2024 |  | July 2, 2023 |  |  |  |
Foreign exchange gain (loss) | $ | 5,297 |  |  | $ | (4,259) |  |  | $ | 14,190 |  |  | $ | (14,290) |  |  |  |  |
Interest benefit | 4,280 |  |  | 5,180 |  |  | 8,000 |  |  | 10,288 |  |  |  |  |
Balance sheet presentation The following table presents the locations in the condensed consolidated balance sheet and fair value of derivative financial instruments as of June 30, 2024 and December 31, 2023:
| June 30, 2024 |  | December 31, 2023
| Fair Value
Asset derivatives: |
Designated foreign currency forward contracts | $ | 1,539 |  |  | $ | 1,629 |
Non-designated foreign currency forward contracts | 206 |  |  | 937 |
Cross-currency interest rate swaps | 16,409 |  |  | 16,883 |
Prepaid expenses and other current assets | 18,154 |  |  | 19,449 |
Cross-currency interest rate swaps | 1,151 |  |  | — |
Other assets | 1,151 |  |  | — |
Total asset derivatives | $ | 19,305 |  |  | $ | 19,449 |
Liability derivatives: |  |  |
Designated foreign currency forward contracts | $ | 3,024 |  |  | $ | 1,866 |
Non-designated foreign currency forward contracts | 320 |  |  | 1,340 |
Other current liabilities | 3,344 |  |  | 3,206 |
Cross-currency interest rate swaps | 24,637 |  |  | 32,097 |
Other liabilities | 24,637 |  |  | 32,097 |
Total liability derivatives | $ | 27,981 |  |  | $ | 35,303 |
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 and six months ended June 30, 2024 and July 2, 2023. Trade receivables The allowance for credit losses as of June 30, 2024 and December 31, 2023 was $9.1 million and $9.5 million, respectively. The current portion of the allowance for credit losses, which was $5.4 million and $5.5 million as of June 30, 2024 and December 31, 2023, respectively, was recognized as a reduction of accounts receivable, net.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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