Derivative Instruments (Notes)

3 Months Ended

Apr. 03, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Instruments and Hedging Activities

The Company operates internationally and, in the normal course of business, is exposed to fluctuations in foreign currency exchange rates. The foreign currency exposures typically arise from transactions denominated in currencies other than the functional currency of the Company's operations, primarily the British Pound, Canadian Dollar, Euro and Japanese Yen. The Company uses derivative instruments that are designated in cash flow hedge relationships to reduce or eliminate the effects of foreign exchange rate change on sales. These contracts typically have maturities of three years or less. At April 3, 2021 and January 2, 2021, the Company had outstanding cash flow hedges with a total notional value of $397.8 million and $431.9 million, respectively.

The Company also enters into economic hedges that are not designated as hedges from an accounting standpoint to reduce or eliminate the effects of foreign exchange rate changes typically related to short term trade receivables and payables. These contracts typically have maturities of twelve months or less. At April 3, 2021 and January 2, 2021, the Company had outstanding foreign currency economic hedges with a total notional value of $140.5 million and $192.2 million, respectively.

As described in Note 2, during July 2020, the Company entered into a forward sale contract as an economic hedge to reduce the Company's exposure to stock price fluctuations on one of its marketable equity securities. The contract had a maturity date of January 2021 and was settled during the three months ended April 3, 2021. The total notional value of this economic hedge was $51.5 million at January 2, 2021.

The fair values of derivative instruments are as follows (in thousands):

		Fair Value
	Classification	April 3, 2021		January 2, 2021
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other current assets	$	1,258	$	261
Foreign currency forward contracts	Accrued expenses	764		2,176
Forward sale contract	Accrued expenses	—		3,904
Derivatives designated as cash flow hedges:
Foreign currency forward contracts	Other current assets	$	6,073	$	362
Foreign currency forward contracts	Other assets	5,750		679
Foreign currency forward contracts	Accrued expenses	1,124		2,092
Foreign currency forward contracts	Long-term liabilities	2,633		8,554

Gains (losses) associated with derivative instruments not designated as hedging instruments are as follows (in thousands):

		Three Months Ended
	Classification	April 3, 2021		March 28, 2020
Loss recognized in income	Other expense, net	$	(10,013)	$	(545)

The following tables reflect the effect of derivatives designated as cash flow hedging (in thousands): 

	Gain (loss) recognized in OCI on Derivative (1)
	Three Months Ended
	April 3, 2021		March 28, 2020
Foreign currency forward contracts	$	17,154	$	7,566

(1)The amount represents the change in fair value of derivative contracts due to changes in spot rates.

	Gain (loss) recognized in earnings on cash flow hedging instruments
	Three Months Ended
	April 3, 2021		March 28, 2020
	Revenue
Consolidated statements of operations in which the effects of cash flow hedging instruments are recorded	$	303,261	$	192,535
(Loss) gain on cash flow hedging relationships:
Foreign currency forward contracts:
Amount of (loss) gain reclassified from AOCI into earnings	$	(517)	$	1,957