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Note 8 - Derivative Financial Instruments
 12 Months Ended
Dec. 27, 2025
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

8.

Derivative Financial Instruments

 

Economic (Non-Designated) Hedges

 

We enter into foreign currency forward contracts to manage our foreign exchange exposure related to intercompany transactions and other balance sheet items that are subject to revaluation. For accounting purposes, our foreign currency forward contracts that are not designated as hedging instruments are recorded at fair value as of the end of our reporting period in our consolidated balance sheets with changes in fair value recorded within foreign transaction gain (loss) in our consolidated statements of operations for both realized and unrealized gains and losses. The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability.

 

The location and amount of gains (losses) related to non-designated derivative instruments in the consolidated statements of operations were as follows (in thousands):

 

Derivatives Not Designated

Location of Gain (Loss)

  

Fiscal Year

  

as Hedging Instruments

Recognized on Derivatives

  

2025

    

2024

    

2023

  

Foreign exchange forward contracts

Foreign transaction gain (loss)

   $ 4,471     $ (7,542 )   $ (2,127 )

 

Net Investment Hedges

 

In the third quarter of fiscal 2024, we initiated a program to hedge foreign currency risk associated with our net investment positions in certain foreign subsidiaries. These exposures are managed through the use of foreign currency forward contracts, which are designated as net investment hedges.

 

The location and amount of gains (losses) from net investment hedges recorded in the foreign currency translation component of AOCL were as follows (in thousands):

 

Derivatives Designated

Location of Gain (Loss)

  

Fiscal Year

  

as Hedging Instruments

Recognized on Derivatives

  

2025

    

2024

    

2023

  

Foreign exchange forward contracts

AOCL

   $ (8,501 )   $ 964       N/A  

 

Gains (losses) recognized in foreign transaction loss, in the consolidated statements of operations for the portion of the net investment hedges excluded from the assessment of hedge effectiveness was $1.5 million and $0.7 million for fiscal 2025 and 2024, respectively. Since our net investment hedge program started in fiscal 2024 there were no amounts recorded in fiscal 2023 or fiscal 2022.

 

Cash flows associated with settlements of our non-designated foreign currency forward contracts are reported in net cash provided by operating activities and our net investment hedges are included in investing activities in our consolidated statements of cash flows.

 

Fair Value

 

The fair value of our foreign currency forward contracts was determined based on current foreign currency exchange rates and forward points. All our foreign currency forward contracts outstanding on December 27, 2025 will mature during the first quarter of fiscal 2026.

 

The following table provides information about our foreign currency forward contracts outstanding as of December 27, 2025 (in thousands):

 

Currency

Contract

Position

  

Contract Amount

(Local Currency)

    

Contract Amount

(U.S. Dollars)

  

Euro

Buy

     40,292       47,500  

Swiss Franc

Buy

     10,858       13,800  

South Korean Won

Buy

     3,571,944       2,480  

Japanese Yen

Buy

     541,841       3,470  

Euro

Sell

     35,100       41,353  

Swiss Franc

Sell

     9,900       12,535  

 

Our foreign currency contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that utilize observable market inputs. The fair value of our foreign currency contracts as of December 27, 2025, and December 28, 2024, was immaterial.