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Note 7 - Derivative Financial Instruments
 3 Months Ended
Mar. 28, 2026
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

7.

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 condensed consolidated balance sheets with changes in fair value recorded within foreign transaction gain (loss) in our condensed 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 and losses related to non-designated derivative instruments in the condensed consolidated statements of operations were as follows (in thousands):

 

     

Three Months Ended

  

Derivatives not designated

Location of gain (loss)

  

Mar. 28,

    

Mar. 29,

  

as hedging instruments

recognized on derivatives

  

2026

    

2025

  

Foreign exchange forward contracts

Foreign transaction gain (loss)

   $ (1,717 )   $ 1,505  

 

Net Investment Hedges

 

We have implemented an ongoing 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 and losses from net investment hedges recorded in the foreign currency translation component of AOCL were as follows (in thousands):

 

     

Three Months Ended

  

Derivatives designated

Location of gain (loss)

  

Mar. 28,

    

Mar. 29,

  

as hedging instruments

recognized on derivatives

  

2026

    

2025

  

Foreign exchange forward contracts

AOCL

   $ 1,059     $ (2,569 )

 

Gains recognized in foreign transaction loss, in the condensed consolidated statements of operations for the portion of the net investment hedges excluded from the assessment of hedge effectiveness was $0.4 million and $0.3 million for the three months ended March 28, 2026, and March 29, 2025, respectively.

 

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 condensed 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 March 28, 2026 will mature during the second quarter of fiscal 2026.

 

The following table provides information about our foreign currency forward contracts outstanding as of March 28, 2026 (in thousands):

 

     

Contract Amount

    

Contract Amount

  

Currency

Contract Position

  

(Local Currency)

    

(U.S. Dollars)

  

Euro

Buy

     43,546     $ 50,300  

Swiss Franc

Buy

     10,935       13,795  

South Korean Won

Buy

     3,254,688       2,160  

Japanese Yen

Buy

     648,839       4,070  

Euro

Sell

     44,200       52,143  

Swiss Franc

Sell

     12,800       16,345  

 

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 values of foreign currency contracts outstanding on March 28, 2026 and December 27, 2025 were immaterial.