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Derivative Instruments and Hedging Activities | 12 Months Ended
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Dec. 29, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company selectively uses derivative and non-derivative instruments to manage market risk associated with changes in interest rates and foreign currency exchange rates. The use of derivatives is intended for hedging purposes only, and the Company does not enter into derivative transactions for speculative purposes. Credit risk represents the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract. The Company generally enters into master netting arrangements that reduce credit risk by permitting net settlement of transactions with the same counterparty. The Company does not have any derivative instruments with credit-risk related contingent features that would require it to post collateral. Interest Rate Hedging Instruments The Company’s interest rate risk relates primarily to interest rate exposures on variable rate debt, including the Revolving Credit Facility and Term Loan. Refer to “—Note 10. Borrowings” for additional information on the currently outstanding components of the Revolving Credit Facility and Term Loan. The Company entered into interest rate swap agreements to hedge the related risk of the variability to the Company’s cash flows due to the rates specified for these credit facilities. The Company designates its interest rate swaps as cash flow hedges. The Company records gains and losses due to changes in fair value of the derivatives within OCI and reclassifies these amounts to Interest expense, net in the same period or periods for which the underlying hedged transaction affects earnings. In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated. Pre-tax unrealized gain of $6.5 million as of December 29, 2024 is expected to be reclassified from OCI to earnings in the next 12 months. The following table summarizes the Company’s interest rate derivative agreements as of December 29, 2024, all of which were interest rate swaps:
Notional Amount (In millions) |  | Description |  | Hedge Designation |  | Effective Date |  | Expiration Date
$ | 550.0 |  |  | Pay 3.765% fixed, receive floating rate (1-month USD-SOFR) |  | Designated cash flow hedge |  | December 30, 2022 |  | May 27, 2027
$ | 200.0 |  |  | Pay 3.7725% fixed, receive floating rate (1-month USD-SOFR) |  | Designated cash flow hedge |  | December 30, 2022 |  | May 27, 2027
$ | 300.0 |  |  | Pay 3.7675% fixed, receive floating rate (1-month USD-SOFR) |  | Designated cash flow hedge |  | December 30, 2022 |  | May 27, 2027
$ | 400.0 |  |  | Pay 3.7575% fixed, receive floating rate (1-month USD-SOFR) |  | Designated cash flow hedge |  | December 30, 2022 |  | May 27, 2027
$ | 350.0 |  |  | Pay 3.7725% fixed, receive floating rate (1-month USD-SOFR) |  | Designated cash flow hedge |  | December 30, 2022 |  | May 27, 2027
During the fourth quarter of 2022 the Company terminated its non-designated $1.0 billion notional value 3.428% interest rate cap. As a result of this termination in fiscal year ended 2022, the Company recognized an immaterial gain within Other expense, net and received $3.3 million of cash proceeds, presented within operating activities in the Consolidated Statements of Cash Flows. Currency Hedging Instruments The Company has currency risk exposures relating primarily to foreign currency denominated monetary assets and liabilities and forecasted foreign currency denominated intercompany and third-party transactions. The Company uses foreign currency forward contracts and may use option contracts and cross currency swaps to manage its currency risk exposures. The Company’s foreign currency forward contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Czech Koruna, Danish Krone, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, Singapore Dollar, South Korean Won, Swedish Krona, Swiss Franc and Thai Baht. The Company designates certain foreign currency forward contracts as cash flow hedges. The Company records gains and losses due to changes in fair value of the derivatives within OCI and reclassifies these amounts to Total revenues and Cost of sales, excluding amortization of intangibles in the same period or periods for which the underlying hedged transaction affects earnings. In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated. Pre-tax unrealized gain of $8.4 million as of December 29, 2024 is expected to be reclassified from OCI to earnings in the next 12 months. The Company also enters into foreign currency forward contracts that are not part of designated hedging relationships and which are intended to mitigate exchange rate risk of monetary assets and liabilities and related forecasted transactions. The Company records these non-designated derivatives at mark-to-market with gains and losses recognized in earnings within Other expense, net. The following table provides details of the currency hedging instruments outstanding as of December 29, 2024:
Description |  | Notional Amount (In millions) |  | Hedge Designation
Foreign currency forward contracts |  | $ | 630.1 |  |  | Cash Flow Hedge
Foreign currency forward contracts |  | $ | 764.0 |  |  | Non-designated
The following table summarizes pre-tax gains and losses from designated derivative and non-derivative instruments within AOCI for fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023:
| Designated Hedging Instruments
(In millions) | Amount of Loss (Gain) Recognized in OCI on Hedges |  | Location of Amounts Reclassified From AOCI Into Income |  | Amount of Loss (Gain) Reclassified From AOCI Into Income
Fiscal Year Ended December 29, 2024 |  |  |  |  |
Foreign currency forward contracts (sales) | $ | (13.0) |  |  | Total revenues |  | $ | 2.5 |
Foreign currency forward contracts (purchases) | $ | 0.7 |  |  | Cost of sales, excluding amortization of intangibles |  | $ | 0.3 |
Interest rate derivatives | $ | (44.8) |  |  | Interest expense, net |  | $ | (25.5) |
Fiscal Year Ended December 31, 2023 |  |  |  |  |
Foreign currency forward contracts (sales) | $ | 7.0 |  |  | Total revenues |  | $ | 4.3 |
Foreign currency forward contracts (purchases) | $ | (2.5) |  |  | Cost of sales, excluding amortization of intangibles |  | $ | 1.9 |
Interest rate derivatives | $ | (13.4) |  |  | Interest expense, net |  | $ | (30.1) |
Fiscal Year Ended January 1, 2023 |  |  |  |  |
Foreign currency forward contracts (sales) | $ | 1.3 |  |  | Total revenues |  | $ | (2.9) |
Foreign currency forward contracts (purchases) | $ | 3.5 |  |  | Cost of sales, excluding amortization of intangibles |  | $ | (0.6) |
Interest rate derivatives | $ | (11.4) |  |  | Interest expense, net |  | $ | (1.7) |
The Company also uses forward exchange contracts to hedge a portion of its net investment in foreign operations against movements in exchange rates. The forward exchange contracts are designated as hedges of the net investment in foreign operations. The unrealized gains or losses on these contracts are recorded in foreign currency translation adjustments within OCI, and remain in AOCI until either the sale or complete or substantially complete liquidation of the subsidiary. The Company excludes certain portions of the change in fair value of its derivative instruments from the assessment of hedge effectiveness (excluded components). Changes in fair value of the excluded components are recognized in OCI. The Company recognizes in earnings the initial value of the excluded components on a straight-line basis over the life of the derivative instrument. The effect of the Company’s net investment hedges on OCI and the Consolidated Statements of (Loss) Income are shown below:
| Net Investment Hedging Relationships
(In millions) | Amount of Pre-tax Loss (Gain) Recognized in OCI |  | Amount of Pre-tax (Gain) Loss Recognized in Other Expense, Net for Amounts Excluded from Effectiveness Testing
Fiscal Year Ended December 29, 2024 |  |  |
Foreign exchange contracts | $ | (29.6) |  |  | $ | (11.6) |
Fiscal Year Ended December 31, 2023 |  |  |
Foreign exchange contracts | $ | 8.5 |  |  | $ | (1.0) |
Fair value gains on foreign currency forward contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense, net and were $12.4 million for fiscal year ended 2024. Fair value gains and losses on foreign currency forward contracts that do not qualify for hedge accounting treatment were not material for fiscal years ended 2023 and 2022. Fair value gains on interest rate derivatives, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense, net and were $3.4 million for fiscal year ended 2022. There were no fair value gains and losses on interest rate derivatives that do not qualify for hedge accounting treatment for fiscal years ended 2024 and 2023. The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023:
(In millions) | December 29, 2024 |  | December 31, 2023
Designated cash flow hedges |  |  |
Interest rate derivatives: |  |  |
Prepaid expenses and other current assets | $ | 1.3 |  |  | $ | 0.2 |
Other assets | 12.4 |  |  | — |
Other liabilities | — |  |  | 6.9 |
Foreign currency forward contracts: |  |  |
Prepaid expenses and other current assets | 11.0 |  |  | 3.2 |
Other assets | 9.1 |  |  | — |
Other current liabilities | 3.3 |  |  | 9.4 |
Other liabilities | 1.4 |  |  | 8.5 |
Non-designated hedging instruments |  |  |
Foreign currency forward contracts: |  |  |
Prepaid expenses and other current assets | 2.8 |  |  | 3.5 |
Other current liabilities | 0.7 |  |  | 2.7 |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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