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Fair Value of Assets and Liabilities
 3 Months Ended
Mar. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value of Assets and Liabilities Fair Value of Assets and Liabilities
 
For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable and unobservable inputs is used to arrive at fair value. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based on the best information available in the circumstances. Depending on the inputs, the Company classifies each fair value measurement as follows:
 
Level 1—Valuations based on unadjusted quoted prices for identical assets or liabilities in active markets;
 
Level 2—Valuations based upon quoted prices for similar instruments, prices for identical or similar instruments in markets that are not active, or model-derived valuations, all of whose significant inputs are observable, and
 
Level 3—Valuations based upon one or more significant unobservable inputs
.
There were no transfers in or out of Level 1, Level 2 and Level 3 during the period.

Following is a description of the valuation methodologies used for instruments measured at fair value and their classification in the valuation hierarchy.
 
Cash Equivalents
 
Cash equivalents primarily consist of money market funds, certificates of deposit, and short-term time deposits, which are held with institutions with sound credit ratings and are highly liquid. The Company classified cash equivalents as Level 1 and are valued at cost which approximates fair value.
Investments in Equity Securities

Investments in equity securities listed on a national market or exchange are valued at the last sales price and classified within Level 1 of the valuation hierarchy and recorded in Investments and Other long-term assets.

Derivatives Designated as Hedging Instruments

On May 12, 2022, the Company entered into an interest rate swap agreement to manage interest rate risk exposure, effectively converting the interest rate on the Company's SOFR based floating-rate loans to a fixed-rate. The interest rate swap, with a notional value of $200 million, was designated as a cash flow hedge against the variability of cash flows associated with the Company's SOFR based loans scheduled to mature on June 30, 2027. The fair value of the interest rate swap was valued using an independent third-party valuation model. Pursuant to this model, changes in fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive loss until the underlying transactions are recognized in earnings. The primary inputs into the valuation of the interest rate swap are interest yield curves, interest rate volatility, credit risk, credit spreads and other market information. The interest rate swap is classified within Level 2 of the fair value hierarchy, since all significant inputs are corroborated by market observable data.

The use of derivatives creates exposure to credit risk relating to potential losses that could be recognized in the event that the counterparties to these instruments fail to perform their obligations under the contracts. The Company seeks to minimize this risk by limiting its counterparties to major financial institutions with acceptable credit ratings and monitoring the total value of positions with individual counterparties. In the event of a default by one of its counterparties, the Company may not receive payments provided for under the terms of its derivatives.

Derivatives Not Designated as Hedging Instruments

On July 14, 2022, the Company entered into a foreign currency exchange forward contract to mitigate the currency fluctuation risk between the Euro and U.S. dollar on its Euro denominated Senior Notes, Series A due 2023. The notional value of the forward contract at July 14, 2022 was €117.0 million and expired on December 7, 2023 with the final settlement value of $6.3 million which the Company used to convert USD to Euro to pay down the €117.0 million of Euro Senior Notes, Series A due 2023. The foreign currency contract was not designated as a hedge instrument and was marked to market on a monthly basis. As a result, changes in fair value during 2023 were reported in Foreign exchange gain in the Condensed Consolidated Statements of Net Income. The fair value of the foreign currency forward contract was valued using market exchange rates by a third party and classified as a Level 2 input under the fair value hierarchy.

As of March 30, 2024 and December 30, 2023, the fair values of the Company's derivative financial instrument and their classifications on the Condensed Consolidated Balance Sheets were as follows:


(in thousands)		Condensed Consolidated Balance Sheet ClassificationMarch 30, 2024December 30, 2023
Derivatives designated as hedging instruments
Interest rate swap agreement:
Designated as cash flow hedgePrepaid expenses and other current assets$3,952 $3,712 
Other long-term assets$4,434 $2,140 

The pre-tax gains recognized on derivative financial instruments in the Condensed Consolidated Statements of Net Income for the three months ended March 30, 2024 and April 1, 2023 were as follows:
Three Months Ended
(in thousands)Classification of Gain Recognized in the Condensed Consolidated Statements of Net IncomeMarch 30, 2024April 1, 2023
Derivatives designated as cash flow hedges
Interest rate swap agreementInterest expense$(1,280)$(975)
Derivatives not designated as hedging instruments
Foreign exchange forward contractForeign exchange gain$— $(819)
The pre-tax (gains) recognized on derivative financial instruments in the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 30, 2024 and April 1, 2023 was as follows:
 Three Months Ended
(in thousands)March 30, 2024April 1, 2023
Derivatives designated as cash flow hedges
Interest rate swap agreement$(2,534)$(5,366)

The pre-tax gain of $4.2 million from accumulated other comprehensive loss to earnings is expected to be recognized during the next twelve months.

Mutual Funds
 
The Company has a non-qualified Supplemental Retirement and Savings Plan which provides additional retirement benefits for certain management employees and named executive officers by allowing participants to defer a portion of their annual compensation. The Company maintains accounts for participants through which participants make investment elections. The marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily determinable fair value and recorded in Other long-term assets.
 
There were no changes during the quarter ended March 30, 2024 to the Company’s valuation techniques used to measure asset and liability fair values on a recurring basis. As of March 30, 2024 and December 30, 2023, the Company did not hold any non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.

The following table presents assets measured at fair value by classification within the fair value hierarchy as of March 30, 2024:
 
 Fair Value Measurements Using 
(in thousands)Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
Cash equivalents$452,453 $— $— $452,453 
Investments in equity securities10,178 — — 10,178 
Mutual funds21,509 — — 21,509 
   Total $484,140 $— $— $484,140 


The following table presents assets measured at fair value by classification within the fair value hierarchy as of December 30, 2023: 
 Fair Value Measurements Using 
(in thousands)Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
Cash equivalents$415,788 $— $— $415,788 
Investments in equity securities10,832 — — 10,832 
Mutual funds20,148 — — 20,148 
   Total$446,768 $— $— $446,768 
In addition to the methods and assumptions used for the financial instruments recorded at fair value as discussed above, the following methods and assumptions are used to estimate the fair value of other financial instruments that are not marked to market on a recurring basis. The Company’s other financial instruments include cash and cash equivalents, short-term investments, accounts receivable and its long-term debt. Due to their short-term maturity, the carrying amounts of cash and cash equivalents, short-term investments and accounts receivable approximate their fair values. The Company’s revolving and term loan debt facilities' fair values approximate book value at March 30, 2024 and December 30, 2023, as the rates on these borrowings are variable in nature.

The carrying value and estimated fair values of the Company’s Euro Senior Notes, Series A and Series B and USD Senior Notes, Series A and Series B, as of March 30, 2024 and December 30, 2023 were as follows:

 March 30, 2024December 30, 2023
(in thousands)Carrying
Value		Estimated
Fair Value		Carrying
Value		Estimated
Fair Value
Euro Senior Notes, Series B due 2028$102,458 $93,470 $105,246 $96,532 
USD Senior Notes, Series B due 2027100,000 95,654 100,000 96,127 
USD Senior Notes, Series A due 202550,000 49,203 50,000 49,070 
USD Senior Notes, Series B due 2030125,000 114,269 125,000 115,687 
USD Senior Notes, due 2032100,000 91,365 100,000 93,228