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Financial Instruments | 3 Months Ended
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Apr. 02, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments | Financial Instruments The Company operates globally with manufacturing and sales facilities around the world. Due to the Company’s global operations, the Company engages in activities involving both financial and market risks. The Company utilizes normal operating and financing activities, along with derivative financial instruments, to minimize these risks. See Note 14 in the Notes to Consolidated Financial Statements in the 2021 Form 10-K for further details regarding the Company's financial instruments and hedging policies. Cross-Currency Swaps. The Company enters into cross-currency swaps to hedge Euro currency exposures of the net investment in certain foreign subsidiaries. As of April 2, 2022 and December 31, 2021, the notional value of cross-currency swap contracts outstanding were $250.0 million and $200.0 million, respectively. There were no cross-currency swap contracts outstanding as of April 3, 2021. The cross-currency swaps were designated as net i nvestment hedges, with the amount of gain or loss associated with the change in fair value of these instruments included within Accumulated other comprehensive loss and recognized upon termination of the respective investment. In the first quarter of 2022, the Company settled $200.0 million of cross-currency swap contracts resulting in a deferred gain of $16.7 million within Accumulated other comprehensive loss. Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum. As of April 2, 2022, December 31, 2021 and April 3, 2021, the notional value of commodity swap contracts outstanding was $19.3 million, $25.3 million and $14.0 million, respectively, an d the contracts mature through 2022. The amount of gain or loss associated with the change in fair value of these instruments is deferred in Accumulated other comprehensive loss and recognized in Cost of sales in the same period or periods during which the hedged transaction affects earnings. As of April 2, 2022, the Company estimates that during the next 12 months it will reclassify approximately $4.6 million in net gains (based on current prices) from Accumulated other comprehensive loss to Cost of sales. Foreign Currency Derivatives. Forward exchange contracts outstanding at April 2, 2022, December 31, 2021 and April 3, 2021 had notional contract values of $651.8 million, $519.8 million and $493.9 million, respectively. The forward contracts outstanding at April 2, 2022 mature through 2023 and mainly relate to the Euro, Australian dollar, Canadian dollar, and Swedish krona. As of April 2, 2022, the Company estimates that during the next 12 months, it will reclassify approximately $7.2 million of net gains (based on current rates) from Accumulated other comprehensive loss to Cost of sales. Interest Rate Derivatives. The Company previously entered into fixed-to-floating interest-rate swaps to convert a portion of its long-term debt from fixed to floating rate debt. In the second half of 2019, the Company settled its fixed-to-floating interest-rate swaps, resulting in a net deferred gain of $2.5 million included within Debt. The Company will reclassify $0.7 million of net deferred gains from Debt to Interest expense during the next 12 months. There are no outstanding fixed-to-floating interest-rate swaps as of April 2, 2022, December 31, 2021 or April 3, 2021. During the first quarter of 2021, the Company entered into forward-starting interest-rate swaps to hedge the interest-rate risk associated with anticipated debt issuances. On August 4, 2021, the company settled these interest-rate swaps, resulting in a net deferred loss of $1.6 million. As a result, there were no forward-starting interest-rate swaps outstanding as o f April 2, 2022 and December 31, 2021. As of April 3, 2021, the outstanding forward-starting interest-rate swaps had a total notional contract value of $150.0 million. During the first quarter of 2022, the Company entered into and settled a series of treasury-lock swaps to hedge the interest-rate risk associated with debt issuances, resulting in a net deferred gain of $5.1 million. As a result, there were no treasury-lock swaps outstanding as of April 2, 2022, December 31, 2021 or April 3, 2021. As of April 2, 2022, the Company had $2.9 million of net deferred gains associated with previously settled forward-starting interest-rate swaps and treasury-lock swaps and as of December 31, 2021 and April 3, 2021, the Company had $2.4 million and $8.6 million, respectively, of net deferred losses associated with previously settled forward-starting interest-rate swaps. These instruments were designated as cash flow hedges with gains and losses included in Accumulated other comprehensive loss. As of April 2, 2022, the Company estimates that during the next 12 months, it will reclassify approximately $0.4 million of net losses from Accumulated other comprehensive loss to Interest expense. As of April 2, 2022, December 31, 2021 and April 3, 2021, the fair values of the Company’s derivative instruments were:
(in millions) |  | Fair Value
Asset Derivatives |  | April 2, 2022 |  | December 31, 2021 |  | April 3, 2021
Derivatives Designated as Cash Flow Hedges |  |  |  |  |  |
Foreign exchange contracts |  | $ | 9.4 |  |  | $ | 8.8 |  |  | $ | 3.3 |
Commodity contracts |  | 4.6 |  |  | 1.9 |  |  | 2.5 |
Interest rate contracts |  | — |  |  | — |  |  | 9.8 |
Total |  | $ | 14.0 |  |  | $ | 10.7 |  |  | $ | 15.6 |
Derivatives Designated as Net Investment Hedges |  |  |  |  |  |
Cross-currency swaps |  | $ | 0.1 |  |  | $ | 14.3 |  |  | $ | — |
Other Hedging Activity |  |  |  |  |  |
Foreign exchange contracts |  | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | 0.2 |
Liability Derivatives |  |  |  |  |  |
Derivatives Designated as Cash Flow Hedges |  |  |  |  |  |
Foreign exchange contracts |  | $ | 4.2 |  |  | $ | 2.6 |  |  | $ | 6.9 |
Derivatives Designated as Net Investment Hedges |  |  |  |  |  |
Cross-currency swaps |  | $ | 1.0 |  |  | $ | — |  |  | $ | — |
Other Hedging Activity |  |  |  |  |  |
Foreign exchange contracts |  | $ | 2.5 |  |  | $ | 0.3 |  |  | $ | 0.4 |
As of April 2, 2022, December 31, 2021 and April 3, 2021, asset derivatives are included within Prepaid expenses and other and Other long-term assets and liability derivatives are included within Accrued expenses and Other long-term liabilities in the Condensed Consolidated Balance Sheets. The effect of derivative instruments on the Condensed Consolidated Statements of Comprehensive Income for the three months ended April 2, 2022 and April 3, 2021 is as shown in the tables below. Gai n o n derivatives recognized in Accumulated other comprehensive loss was as follows:
(in millions) |  |  |  |
Derivatives Designated as Cash Flow Hedging Instruments |  | April 2, 2022 |  | April 3, 2021
Interest rate contracts |  | $ | 5.3 |  |  | $ | 9.8 |
Foreign exchange contracts |  | 2.6 |  |  | 2.6 |
Commodity contracts |  | 5.0 |  |  | 2.1 |
Total |  | $ | 12.9 |  |  | $ | 14.5 |
Derivatives Designated as Net Investment Hedging Instruments |  |  |  |
Cross-currency swaps |  | $ | 1.4 |  |  | $ | — |
The amount of Gain (loss) reclassified from Accumulated other comprehensive loss into earnings was as follows:
(in millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives Designated as Cash Flow Hedging Instruments |  | Location of Gain (Loss) |  |  |  |  |  | April 2, 2022 |  | April 3, 2021 |  |  |  |
Interest rate contracts |  | Interest expense |  |  |  |  |  | $ | — |  |  | $ | (0.1) |  |  |  |  |
Foreign exchange contracts |  | Cost of sales |  |  |  |  |  | 2.7 |  |  | (3.1) |  |  |  |  |
Commodity contracts |  | Cost of sales |  |  |  |  |  | 1.6 |  |  | 0.3 |  |  |  |  |
Total |  |  |  |  |  |  |  | $ | 4.3 |  |  | $ | (2.9) |  |  |  |  |
Derivatives Designated as Fair Value Hedging Instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | Interest expense |  |  |  |  |  | $ | 0.2 |  |  | $ | 0.2 |  |  |  |  |
Other Hedging Activity |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Cost of sales |  |  |  |  |  | $ | (3.6) |  |  | $ | 1.8 |  |  |  |  |
Foreign exchange contracts |  | Other expense, net |  |  |  |  |  | — |  |  | (2.2) |  |  |  |  |
Total |  |  |  |  |  |  |  | $ | (3.6) |  |  | $ | (0.4) |  |  |  |  |
Fair Value of Other Financial Instruments. The carrying values of the Company's short-term financial instruments, including cash and cash equivalents and accounts and notes receivable, approximate their fair values because of the short maturity of these instruments. At April 2, 2022, December 31, 2021 and April 3, 2021, the fair value of the Company’s long-term debt, including short-term debt and current maturities, was approximately $2,464.8 million, $1,914.7 million and $1,063.2 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note 7 to the Notes to Consolidated Financial Statements in the 2021 Form 10-K. The carrying value of long-term debt, including short-term debt and current maturities, was $2,534.1 million, $1,843.1 million and $965.2 million as of April 2, 2022, December 31, 2021 and April 3, 2021, respectively.

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- 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 https://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 https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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