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Derivative Instruments and Hedging Activities
 6 Months Ended
Jul. 01, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES     
Foreign Currency Option Contracts

In September 2021, to economically hedge the foreign currency exposure associated with the planned payment of the euro-denominated purchase price for HRA Pharma, we entered into two non-designated currency option contracts with a total notional amount of $1.1 billion that were scheduled to mature in September 2022. In April 2022, due to market conditions, we unwound the two options and entered into two new undesignated options to economically hedge the purchase price for HRA Pharma for a total notional amount of $2.0 billion. All premiums associated with the HRA Pharma related currency options were settled in April 2022 for $37.1 million. Within Other (income) expense we recorded a loss of $12.7 million and $16.2 million for the three and six months ended July 2, 2022, respectively. There was no activity during the three and six months ended July 1, 2023.

Interest Rate Swaps

In April 2022, to economically hedge the interest rate risk of the New Senior Secured Credit Facilities (as defined in Note 11), we entered into five variable-to-fixed interest rate swap agreements. Three of the interest rate swaps were designated as cash flow hedges to fix the interest rate on a substantial portion of the 2022 Term Loan B Facility (as defined in Note 11). The interest rate swaps cover an interest period ranging from June 1, 2022, through April 1, 2029, on notional balances that decline from $1.0 billion to $812.5 million over the term. The other two interest rate swaps were designated as cash flow hedges to fix the interest rate on a substantial portion of the 2022 Term Loan A Facility (as defined in Note 11). The interest rate swaps cover an interest period ranging from June 1, 2022, through April 1, 2027, on notional balances that decline from $487.5 million to $387.5 million over the term.

As a designated cash flow hedge, gains and losses will be deferred in AOCI and recognized within Interest expense, net when interest is paid on the New Senior Secured Credit Facilities.

Cross-currency Swaps

In April 2022, we entered into three fixed-for-fixed cross currency interest rate swaps designated as net investment hedge to hedge the EUR currency exposure of our investment in European operations. In October 2022, we replaced those swaps by entering into three fixed-for-fixed cross currency interest rate swaps at market rates and designated the instruments as net investment hedges on our investment in European operations. The following are the terms and notional amounts outstanding:

•$700 million notional amount outstanding from October 25, 2022 through December 15, 2024;
•$700 million notional amount outstanding from October 25, 2022 through March 15, 2026; and
•$100 million notional amount outstanding from October 25, 2022 through June 15, 2030.
Foreign Currency Forwards

Notional amounts of foreign currency forward contracts were as follows (in millions):
July 1, 2023December 31, 2022
British Pound (GBP)$122.4 $224.9 
Swedish Krona (SEK)86.5 56.9 
European Euro (EUR)66.7 61.7 
Danish Krone (DKK)43.0 51.7 
United States Dollar (USD)36.2 51.7 
Polish Zloty (PLZ)30.9 25.2 
Norwegian Krone (NOK)28.4 12.4 
Chinese Yuan (CNH)25.8 34.4 
Canadian Dollar (CAD)22.8 24.9 
Mexican Peso (MXN)— 13.3 
Hungarian Forint (HUF)— 10.6 
Other (1)
15.6 25.9 
Total$478.3 $593.6 
(1) Number consists of various currencies notional amounts, none of which individually exceed $10 million in either period presented.

The maximum term of our forward currency exchange contracts is 60 months.

Effects of Derivatives on the Financial Statements

The below tables indicate the effects of all derivative instruments on the Condensed Consolidated Financial Statements. All amounts exclude income tax effects. The balance sheet location and gross fair value of our derivative instruments were as follows (in millions):
Balance Sheet LocationJuly 1, 2023December 31, 2022
Designated derivative assets:
Foreign currency forward contractsPrepaid expenses and other current assets$1.4 $1.1 
Interest rate swap agreementsPrepaid expenses and other current assets— 3.0 
Foreign currency forward contractsOther non-current assets0.4 0.7 
Interest rate swap agreementsOther non-current assets53.8 47.5 
Total designated derivative assets$55.6 $52.3 
Non-designated derivative assets:
Foreign currency forward contractsPrepaid expenses and other current assets$1.3 $2.4 
Total non-designated derivative assets$1.3 $2.4 
Designated derivative liabilities:
Foreign currency forward contractsOther accrued liabilities$1.7 $4.2 
Cross-currency swapOther accrued liabilities136.3 96.1 
Total designated derivative liabilities$138.0 $100.3 
Non-designated derivative liabilities:
Foreign currency forward contractsOther accrued liabilities$1.5 $1.0 
The amounts of (income)/expense recognized in earnings related to our non-designated derivatives on the Consolidated Statements of Operations were as follows (in millions):
Three Months EndedSix Months Ended
Non-Designated DerivativesIncome Statement LocationJuly 1, 2023July 2, 2022July 1, 2023July 2, 2022
Foreign currency forward contractsOther (income) expense, net$(3.1)$1.6 $(4.3)$2.0 
Interest expense, net— 0.8 (0.6)(0.4)
$(3.1)$2.4 $(4.9)$1.6 
Foreign currency optionsOther (income) expense, net$— $12.7 $— $16.2 
The following tables summarize the effect of derivative instruments designated as hedging instruments in AOCI (in millions):
Gain/(Loss)
Reclassified from AOCI into EarningsRelated to Amounts Excluded from Effectiveness Testing
Amount Recorded in OCI(1)
Classification
Amount(2)
ClassificationAmount Recognized in Earnings on Derivatives
Three Months Ended July 1, 2023
Cash flow hedges
Interest rate swap agreements$28.9 Interest expense, net$5.5 Interest expense, net$— 
Foreign currency forward contracts$(5.8)Net sales$(0.2)Net sales$0.2 
Cost of sales$0.4 Cost of sales$0.1 
Other (income) expense, net$(0.6)
 $23.1 $5.7 $(0.3)
Net investment hedges
Cross-currency swap$(25.0)Interest expense, net$6.4 
Six Months Ended July 1, 2023
Cash flow hedges
Interest rate swap agreements$3.3 Interest expense, net$9.8 Interest expense, net$— 
Foreign currency forward contracts(10.3)Net sales0.2 Net sales0.2 
Cost of sales0.1 Cost of sales0.1 
Other (income) expense, net(0.5)
 $(7.0)$10.1 $(0.2)
Net investment hedges
Cross-currency swap$(40.2)Interest expense, net$12.9 
Three Months Ended July 2, 2022
Cash flow hedges
Interest rate swap agreements$(6.2)Interest expense, net$(1.6)Interest expense, net$— 
Foreign currency forward contracts$2.3 Net sales0.3 Net sales$(0.1)
Cost of sales(0.9)Cost of sales$(0.1)
Other (income) expense, net$(0.8)
 $(3.9)$(2.2)$(1.0)
Net investment hedges
Cross-currency swap$38.7 Interest expense, net$3.6 
Six Months Ended July 2, 2022
Cash flow hedges
Interest rate swap agreements$(6.2)Interest expense, net$(2.0)Interest expense, net$— 
Foreign currency forward contracts(4.9)Net sales0.5 Net sales(0.2)
Cost of sales(1.3)Cost of sales— 
Other (income) expense, net(0.7)
 $(11.1)$(2.8)$(0.9)
Net investment hedges
Cross-currency swap$34.1 Interest expense, net$4.2 
(1) Net gain of $1.8 million is expected to be reclassified out of AOCI into earnings during the next 12 months
(2) For additional details about the effect of the amounts reclassified from AOCI refer to Note 13.
The classification and amount of gain/(loss) recognized in earnings on fair value and hedging relationships were as follows (in millions):
Net SalesCost of SalesInterest Expense, netOther (Income) Expense, net
Three Months Ended July 1, 2023
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded
$1,193.1 $765.1 $44.0 $(9.7)
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings$(0.2)$0.4 $— $— 
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach$0.2 $0.1 $— $(0.6)
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings$— $— $5.5 $— 
Six Months Ended July 1, 2023
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded$2,374.8 $1,532.9 $87.6 $(9.0)
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings$0.2 $0.1 $— $— 
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach$0.2 $0.1 $— $(0.5)
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings$— $— $9.8 $— 
Three Months Ended July 2, 2022
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded
$1,121.7 $749.6 $38.3 $53.8 
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings$0.3 $(0.9)$— $— 
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach$(0.1)$(0.1)$— $(0.8)
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings$— $— $(1.6)$— 
Six Months Ended July 2, 2022
Total amounts of income and expense line items presented on the Condensed Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded$2,196.2 $1,486.3 $74.1 $52.7 
Gain (loss) on cash flow hedging relationships
Foreign currency forward contracts
Amount of gain or (loss) reclassified from AOCI into earnings$0.5 $(1.3)$— $— 
Amount excluded from effectiveness testing recognized using a systematic and rational amortization approach$(0.2)$— $— $(0.7)
Interest rate swap agreements
Amount of gain or (loss) reclassified from AOCI into earnings$— $— $(2.0)$—