Financial instruments

6 Months Ended

Jun. 26, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Foreign currency forward contracts

We use derivative instruments for risk management purposes. Foreign currency forward contracts designated as cash flow hedges are used to manage foreign currency transaction exposure. Foreign currency forward contracts not designated as hedges for accounting purposes are used to manage exposure related to near term foreign currency denominated monetary assets and liabilities. We enter into the non-designated foreign currency forward contracts for periods consistent with our currency translation exposures, which generally approximate one month. For the three and six months ended June 26, 2022, we recognized a gain of $0.1 million and a loss of $3.2 million, respectively, related to non-designated foreign currency forward contracts. For the three and six months ended June 27, 2021, we recognized a gain of $0.7 million and a loss of $2.5 million, respectively, related to non-designated foreign currency forward contracts.

The total notional amount for all open foreign currency forward contracts designated as cash flow hedges as of June 26, 2022 and December 31, 2021 was $154.0 million and $149.5 million, respectively. The total notional amount for all open non-designated foreign currency forward contracts as of June 26, 2022 and December 31, 2021 was $132.1 million and $161.2 million, respectively. All open foreign currency forward contracts as of June 26, 2022 have durations of 12 months or less.

Cross-currency interest rate swaps

During 2019, we entered into cross-currency swap agreements with five different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Under the terms of the cross-currency swap agreements, we have notionally exchanged $250 million at an annual interest rate of 4.875% for €219.2 million at an annual interest rate of 2.4595%. The swap agreements are designed as net investment hedges and expire on March 4, 2024.

During 2018, we entered into cross-currency swap agreements with six different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Under the terms of the cross-currency swap agreements, we have notionally exchanged $500 million at an annual interest rate of 4.625% for €433.9 million at an annual interest rate of 1.942%. The swap agreements are designed as net investment hedges and expire on October 4, 2023.

The swap agreements described above require an exchange of the notional amounts upon expiration or earlier termination of the agreements. We and the counterparties have agreed to effect the exchange through a net settlement.

The cross-currency swaps are marked to market at each reporting date and any changes in fair value are recognized as a component of accumulated other comprehensive income (loss) ("AOCI"). The following table summarizes the foreign exchange gains and losses recognized within AOCI and the interest benefit recognized within interest expense related to cross currency swap for the three and six months ended June 26, 2022 and June 27, 2021:


	Three Months Ended				Six Months Ended
	June 26, 2022		June 27, 2021		June 26, 2022		June 27, 2021
Foreign exchange gains (losses)	$	22,614	$	(7,127)	$	26,454	$	10,487
Interest benefit	5,297		4,479		10,145		9,126

Balance sheet presentation

The following table presents the locations in the condensed consolidated balance sheet and fair value of derivative financial instruments as of June 26, 2022 and December 31, 2021:


	June 26, 2022		December 31, 2021
	Fair Value
Asset derivatives:
Designated foreign currency forward contracts	$	3,189	$	1,957
Non-designated foreign currency forward contracts	32		56
Cross-currency interest rate swaps	22,034		21,718
Prepaid expenses and other current assets	25,255		23,731
Cross-currency interest rate swaps	43,352		9,560
Other assets	43,352		9,560
Total asset derivatives	$	68,607	$	33,291
Liability derivatives:
Designated foreign currency forward contracts	$	988	$	993
Non-designated foreign currency forward contracts	300		147
Other current liabilities	1,288		1,140


Total liability derivatives	$	1,288	$	1,140

See Note 10 for information on the location and amount of gains and losses attributable to derivatives that were reclassified from AOCI to expense (income), net of tax.

There was no ineffectiveness related to our cash flow hedges during the three and six months ended June 26, 2022 and June 27, 2021.

Trade receivables

The allowance for credit losses as of June 26, 2022 and December 31, 2021 was $8.7 million and $10.8 million, respectively. The current portion of the allowance for credit losses, which was $4.3 million and $6.0 million as of June 26, 2022 and December 31, 2021, respectively, was recognized as a reduction of accounts receivable, net.