Financial Instruments

12 Months Ended

Dec. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

FINANCIAL INSTRUMENTS

Derivatives are measured at fair value and recognized as either assets or liabilities. Derivatives that do not qualify as a hedge must be adjusted to fair value in earnings. If a derivative does qualify, changes in the fair value will either be offset against the change in the fair value of the hedged assets, liabilities or firm commitments or recognized in other accumulated comprehensive income until the hedged item is recognized in earnings.

(a)Foreign Exchange

The company periodically enters into derivative instruments, principally forward contracts to reduce exposures pertaining to fluctuations in foreign exchange rates. The notional amount of foreign currency contracts outstanding was $253.1 million and $562.5 million as of December 30, 2023 and December 31, 2022, respectively. The fair value of these forward contracts was an unrealized gain of less than $0.1 million at the end of the year.

(b)Interest Rate

The company has entered into interest rate swaps to fix the interest rate applicable to certain of its variable-rate debt. Prior to July 1, 2023, the company amended its Credit Facility and the existing interest rate swap agreements to transition the interest reference rate from one-month LIBOR to one-month SOFR. There were no other changes to the company's Credit Facility or timing of cash flows. The amendment was entered into because the LIBOR rate historically used was no longer published after June 30, 2023. The company utilized expedients within ASC 848 to conclude that this amendment should be treated as a non-substantial modification of the existing contract, resulting in no impact to the company's consolidated financial statements. The company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income. The fair value of these instruments was an asset of $42.8 million and an asset of $65.0 million as of December 30, 2023 and December 31, 2022, respectively. The change in fair value of these swap agreements in 2023 was a loss of $16.5 million, net of taxes.

A summary of the company’s interest rate swaps is as follows (in thousands):


		Twelve Months Ended
	Location	Dec 30, 2023		Dec 31, 2022
Fair value	Prepaid expenses	$	2,897	$	6,805
Fair value	Other assets	$	39,882	$	58,180


Amount of gain/(loss) recognized in other comprehensive income	Other comprehensive income	$	10,015	$	79,472
Gain/(loss) reclassified from accumulated other comprehensive income (effective portion)	Interest expense	$	32,221	$	(3,503)

Interest rate swaps are subject to default risk to the extent the counterparty is unable to satisfy its settlement obligations under the interest rate swap agreements. The company reviews the credit profile of the financial institutions that are counterparties to such swap agreements and assesses their creditworthiness prior to entering into the interest rate swap agreements and throughout the term. The interest rate swap agreements typically contain provisions that allow the counterparty to require early settlement in the event that the company becomes insolvent or is unable to maintain compliance with its covenants under its existing debt agreement.