XML 28 R16.htm IDEA: XBRL DOCUMENT
v3.21.2

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended
--- | ---
Oct. 02, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES Summary of Derivative Financial Instruments The Company enters into derivative contracts with external counterparties to hedge certain foreign currency transactions. The notional amount of all outstanding foreign currency exchange contracts was $298.9 million at September 2021, $295.0 million at December 2020 and $258.6 million at September 2020, consisting primarily of contracts hedging exposures to the euro, Mexican peso, Canadian dollar, British pound, Polish zloty, Swedish krona, and Indian rupee. Foreign currency exchange contracts have maturities up to 20 months. During 2019, the Company entered into "floating to fixed" interest rate swap agreements to mitigate exposure to volatility in LIBOR rates on the Company's future interest payments. The notional amount of the interest rate swap agreements was $350.0 million at September 2021 and $400.0 million at both December 2020 and September 2020. Because these interest rate swap agreements meet the criteria for hedge accounting, all related gains and losses are deferred within accumulated other comprehensive loss ("AOCL") and are being amortized through April 18, 2024. The Company's outstanding derivative financial instruments met the criteria for hedge accounting at the inception of the hedging relationship. At each reporting period, the Company assesses whether the hedging relationships continue to be highly effective in offsetting changes in cash flows of hedged items. If the Company determines that the hedging relationship has ceased to be highly effective, it would discontinue hedge accounting. All designated hedging relationships were determined to be highly effective as of September 2021. A limited number of foreign currency exchange contracts intended to hedge assets and liabilities are not designated as hedges for accounting purposes. The following table presents the fair value of outstanding derivatives on an individual contract basis:
|  | Fair Value of Derivatives with Unrealized Gains |  |  | Fair Value of Derivatives with Unrealized Losses
(In thousands) |  | September 2021 |  |  | December 2020 |  | September 2020 |  |  | September 2021 |  |  | December 2020 |  | September 2020
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts |  | $ | 7,057 |  |  |  | $ | 7,179 |  |  | $ | 2,310 |  |  |  | $ | (2,545) |  |  |  | $ | (8,640) |  |  | $ | (7,096) |
Interest rate swap agreements |  | — |  |  |  | — |  |  | — |  |  |  | (10,582) |  |  |  | (16,309) |  |  | (18,094) |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts |  | 73 |  |  |  | 352 |  |  | 458 |  |  |  | — |  |  |  | (154) |  |  | (149) |
Total derivatives |  | $ | 7,130 |  |  |  | $ | 7,531 |  |  | $ | 2,768 |  |  |  | $ | (13,127) |  |  |  | $ | (25,103) |  |  | $ | (25,339) |
The Company records and presents the fair value of all derivative assets and liabilities in the Company's balance sheets on a gross basis, even though certain derivative contracts are subject to master netting agreements. If the Company were to offset and record the asset and liability balances of its derivative contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Company's balance sheets would be adjusted from the current gross presentation to the net amounts. The following table presents a reconciliation of gross to net amounts for derivative asset and liability balances:
|  | September 2021 |  |  | December 2020 |  | September 2020
(In thousands) |  | Derivative Asset |  | Derivative Liability |  |  | Derivative Asset |  | Derivative Liability |  | Derivative Asset |  | Derivative Liability
Gross amounts presented in the balance sheet |  | $ | 7,130 |  |  | $ | (13,127) |  |  |  | $ | 7,531 |  |  | $ | (25,103) |  |  | $ | 2,768 |  |  | $ | (25,339) |
Gross amounts not offset in the balance sheet |  | (1,560) |  |  | 1,560 |  |  |  | (1,818) |  |  | 1,818 |  |  | (2,110) |  |  | 2,110 |
Net amounts |  | $ | 5,570 |  |  | $ | (11,567) |  |  |  | $ | 5,713 |  |  | $ | (23,285) |  |  | $ | 658 |  |  | $ | (23,229) |
The following table presents the location of derivatives in the Company's balance sheets, with current or noncurrent classification based on maturity dates:
(In thousands) |  | September 2021 |  |  | December 2020 |  | September 2020
Prepaid expenses and other current assets |  | $ | 6,440 |  |  |  | $ | 5,773 |  |  | $ | 2,006 |
Accrued liabilities |  | (2,110) |  |  |  | (7,166) |  |  | (6,594) |
Other assets |  | 690 |  |  |  | 1,758 |  |  | 762 |
Other liabilities |  | (11,017) |  |  |  | (17,937) |  |  | (18,745) |
Cash Flow Hedges The following tables present the pre-tax effects of cash flow hedges included in the Company's statements of operations and statements of comprehensive income (loss):
| Gain (Loss) on Derivatives Recognized in AOCL
(In thousands) | Three Months Ended |  | Nine Months Ended
Cash Flow Hedging Relationships |  | September 2021 |  |  | September 2020 |  |  | September 2021 |  |  | September 2020
Foreign currency exchange contracts |  | $ | 1,408 |  |  |  | $ | (313) |  |  |  | $ | 4,311 |  |  |  | $ | (10,407) |
Interest rate swap agreements |  | (264) |  |  |  | (897) |  |  |  | 1,213 |  |  |  | (18,220) |
Total |  | $ | 1,144 |  |  |  | $ | (1,210) |  |  |  | $ | 5,524 |  |  |  | $ | (28,627) |
| Gain (Loss) Reclassified from AOCL into Income
(In thousands) | Three Months Ended |  | Nine Months Ended
Location of Gain (Loss) |  | September 2021 |  |  | September 2020 |  |  | September 2021 |  |  | September 2020
Net revenues |  | $ | 47 |  |  |  | $ | (36) |  |  |  | $ | 247 |  |  |  | $ | (588) |
Cost of goods sold |  | 58 |  |  |  | (578) |  |  |  | (2,775) |  |  |  | 4,778 |
Other expense, net |  | (170) |  |  |  | 36 |  |  |  | (597) |  |  |  | 173 |
Interest expense |  | (1,507) |  |  |  | (1,636) |  |  |  | (4,515) |  |  |  | (3,216) |
Total |  | $ | (1,572) |  |  |  | $ | (2,214) |  |  |  | $ | (7,640) |  |  |  | $ | 1,147 |
Derivative Contracts Not Designated as Hedges Contracts that are not designated as hedges and are recorded at fair value in the Company's balance sheets primarily relate to derivatives contracts used by the Company to manage foreign currency exchange risk on certain accounts receivable and accounts payable. Gains or losses on the balance sheet contracts largely offset the net transaction gains or losses on the related assets and liabilities. In addition, a limited number of cash flow hedges are deemed ineffective and de-designated. Changes in the fair values of derivative contracts not designated as hedges are recognized directly in earnings. The following table presents a summary of these derivatives included in the Company's statements of operations:
(In thousands) |  | Location of Gain (Loss) on Derivatives Recognized in Income |  | Gain (Loss) on Derivatives Recognized in Income
|  |  | Three Months Ended |  | Nine Months Ended
Derivatives Not Designated as Hedges |  |  |  | September 2021 |  |  | September 2020 |  |  | September 2021 |  |  | September 2020
Foreign currency exchange contracts |  | Net revenues |  |  | $ | — |  |  |  | $ | 37 |  |  |  | $ | (104) |  |  |  | $ | 43 |
|  | Cost of goods sold |  |  | 18 |  |  |  | 563 |  |  |  | 4 |  |  |  | (2,559) |
|  | Other expense, net |  |  | 205 |  |  |  | (18) |  |  |  | 325 |  |  |  | (8) |
Total |  |  |  |  | $ | 223 |  |  |  | $ | 582 |  |  |  | $ | 225 |  |  |  | $ | (2,524) |
Other Derivative Information There were no significant amounts recognized in earnings for any hedging relationships deemed ineffective during the three and nine months ended September 2021 and September 2020. At September 2021, AOCL included $0.8 million of pre-tax net deferred losses for foreign currency exchange contracts and interest rate swap agreements that are expected to be reclassified to earnings during the next 12 fiscal months. The amounts ultimately reclassified to earnings will depend on rates in effect when outstanding derivative contracts are settled.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration