Financial Instruments

3 Months Ended

Mar. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

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 12 in the Notes to Consolidated Financial Statements in the 2023 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. The cross-currency swaps were designated as net investment hedges, with the amount of gain or loss associated with the change in fair value of these instruments deferred within Accumulated other comprehensive loss and recognized upon termination of the respective investment. During the fourth quarter of 2023, the company entered into $250.0 million of cross-currency swap contracts. As of March 30, 2024 and December 31, 2023, the notional value of cross-currency swap contracts outstanding was $250.0 million. There were no cross-currency swaps outstanding as of April 1, 2023.

Commodity Price. The Company uses commodity swaps to hedge anticipated purchases of aluminum and copper. As of March 30, 2024, December 31, 2023 and April 1, 2023, the notional value of commodity swap contracts outstanding was $27.7 million, $31.8 million and $28.5 million, respectively, and the contracts mature through 2025. 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 March 30, 2024, the Company estimates that, during the next 12 months, it will reclassify approximately $1.0 million in net losses (based on current prices) from Accumulated other comprehensive loss to Cost of sales.

Foreign Currency Derivatives. The Company enters into forward contracts to manage foreign exchange exposure related to forecasted transactions and assets and liabilities that are subject to risk from foreign currency exchange rate changes. Forward exchange contracts outstanding as of March 30, 2024, December 31, 2023 and April 1, 2023 had notional contract values of $720.2 million, $694.6 million and $690.6 million, respectively. The forward contracts outstanding as of March 30, 2024 mature through 2025 and mainly relate to the Euro, Australian dollar, Norwegian krone and Mexican peso. As of March 30, 2024, the Company estimates that during the next 12 months, it will reclassify approximately $5.3 million of net gains (based on current rates) from Accumulated other comprehensive loss to Cost of sales.

Interest-Rate Derivatives. The Company had net deferred gains associated with previously settled forward-starting interest-rate swaps and treasury-lock swaps of $3.3 million as of March 30, 2024, December 31, 2023, and April 1, 2023, respectively. These instruments were designated as cash flow hedges with gains and losses included in Accumulated other comprehensive loss. As of March 30, 2024, the Company estimates that during the next 12 months, it will reclassify approximately $0.1 million of net gains from Accumulated other comprehensive loss to Interest expense.

As of March 30, 2024, December 31, 2023 and April 1, 2023, the fair values of the Company’s derivative instruments were:



(in millions)	Fair Value
Asset Derivatives	March 30, 2024		December 31, 2023		April 1, 2023
Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts	$	9.3	$	4.1	$	12.9
Commodity contracts	0.4		0.9		0.3


Total	$	9.7	$	5.0	$	13.2






Other Hedging Activity
Foreign exchange contracts	$	0.7	$	0.2	$	0.7

Liability Derivatives
Derivatives Designated as Cash Flow Hedges
Foreign exchange contracts	$	2.4	$	6.1	$	6.0
Commodity contracts	0.7		0.8		1.0

Total	$	3.1	$	6.9	$	7.0










Derivatives Designated as Net Investment Hedges
Cross-currency swaps	$	1.0	$	5.0	$	—

Other Hedging Activity
Foreign exchange contracts	$	4.3	$	1.8	$	0.9

As of March 30, 2024, December 31, 2023 and April 1, 2023, asset derivatives are included within Prepaid expenses and other, 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 March 30, 2024 and April 1, 2023 is shown in the tables below.

The amount of gain (loss) on derivatives recognized in Accumulated other comprehensive loss was as follows:


(in millions)
Derivatives Designated as Cash Flow Hedging Instruments	March 30, 2024		April 1, 2023

Foreign exchange contracts	10.8		3.3
Commodity contracts	(1.1)		(0.2)
Total	$	9.7	$	3.1

Derivatives Designated as Net Investment Hedging Instruments
Cross-currency swaps	$	4.0	$	—

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)	March 30, 2024		April 1, 2023
Interest-rate contracts	Interest expense	$	—	$	(0.1)
Foreign exchange contracts	Cost of sales	1.9		7.5
Commodity contracts	Cost of sales	(0.8)		(0.6)
Total		$	1.1	$	6.8

The amount of gain (loss) on derivatives recognized directly into earnings was as follows:


(in millions)
Derivatives Designated as Fair Value Hedging Instruments	Location of Gain (Loss)	March 30, 2024		April 1, 2023
Interest-rate contracts	Interest expense	$	—	$	0.2

Other Hedging Activity
Foreign exchange contracts	Cost of sales	$	2.0	$	(0.7)
Foreign exchange contracts	Other expense, net	(2.7)		(0.1)
Total		$	(0.7)	$	(0.8)

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. As of March 30, 2024, December 31, 2023 and April 1, 2023, the fair value of the Company’s long-term debt, including current maturities, and short-term debt was approximately $2,659.5 million, $2,228.2 million and $2,257.4 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note 6 to the Notes to Consolidated Financial Statements in the 2023 Form 10-K. The carrying value of long-term debt, including current maturities, and short-term debt was $2,859.1 million, $2,458.7 million and $2,541.2 million as of March 30, 2024, December 31, 2023 and April 1, 2023, respectively.