Quarterly report [Sections 13 or 15(d)]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

v3.26.1
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
 3 Months Ended
Apr. 04, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Summary of Derivative Financial Instruments
The Company enters into derivative contracts with external counterparties on a recurring basis to hedge certain foreign currency transactions. The notional amount of these outstanding foreign currency exchange contracts was $678.9 million at March 2026, $717.4 million at December 2025 and $283.1 million at March 2025, consisting primarily of contracts hedging exposures to the Norwegian krone, euro, Canadian dollar, Mexican peso, Polish zloty, Swedish krona and the British pound. Foreign currency exchange contracts have maturities up to 20 months.
The Company periodically enters into "floating to fixed" interest rate swap agreements to mitigate exposure to volatility in reference rates on the Company's future interest payments on indebtedness. Because these swap agreements meet the criteria for hedge accounting, all related gains and losses are deferred within "accumulated other comprehensive loss" ("AOCL") in the Company's balance sheets and are amortized through the swap maturity dates.
On September 9, 2024, the Company entered into "floating to fixed" interest rate swap agreements (the "2024 Swap Agreements") that mature on August 18, 2029. In April 2025, the Company entered into "floating to fixed" interest rate swap agreements (the "2025 Swap Agreements") that mature on March 18, 2027 and April 18, 2027. The notional amount of the 2024 Swap Agreements and the 2025 Swap Agreements was $500.0 million at March 2026 and $550.0 million at December 2025. The notional amount of the 2024 Swap Agreements was $150.0 million at March 2025.
The Company's outstanding derivative financial instruments met the criteria for hedge accounting at the inception of the hedging relationship. At each reporting period, the Company assesses whether the hedging relationships continue to be highly effective in offsetting changes in cash flows of hedged items. If the Company determines that a specific hedging relationship has ceased to be highly effective, it discontinues hedge accounting. All designated hedging relationships were determined to be highly effective as of March 2026.
The following table presents the fair value of outstanding derivatives on an individual contract basis:
Fair Value of Derivatives
with Unrealized Gains		 Fair Value of Derivatives
with Unrealized Losses
March December March March December March
(In thousands) 2026 2025 2025 2026 2025 2025
Derivatives designated as hedging instruments:
Foreign currency exchange contracts $ 16,558  $ 11,373  $ 3,045  $ (8,397) $ (9,641) $ (9,557)
Interest rate swap agreements 2,334  279  2,508  —  —  — 
Derivatives not designated as hedging instruments:
Foreign currency exchange contracts 1,297  —  15  (266) (255) (8,865)
Total derivatives $ 20,189  $ 11,652  $ 5,568  $ (8,663) $ (9,896) $ (18,422)
The Company records and presents the fair value of all derivative assets and liabilities in the Company's balance sheets on a gross basis, even though certain derivative contracts are subject to master netting agreements. If the Company were to offset and record the asset and liability balances of its derivative contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Company's balance sheets would be adjusted from the current gross presentation to the net amounts.
The following table presents a reconciliation of gross to net amounts for derivative asset and liability balances:
March 2026 December 2025 March 2025
(In thousands) Derivative Asset Derivative Liability Derivative Asset Derivative Liability Derivative Asset Derivative Liability
Gross amounts presented in the balance sheet $ 20,189  $ (8,663) $ 11,652  $ (9,896) $ 5,568  $ (18,422)
Gross amounts not offset in the balance sheet (5,755) 5,755  (3,043) 3,043  (2,827) 2,827 
Net amounts $ 14,434  $ (2,908) $ 8,609  $ (6,853) $ 2,741  $ (15,595)
The following table presents the location of derivatives in the Company's balance sheets, with current or noncurrent classification based on maturity dates:
(In thousands) March 2026 December 2025 March 2025
Prepaid expenses and other current assets $ 14,703  $ 9,906  $ 2,567 
Accrued and other current liabilities (7,447) (8,546) (17,305)
Other assets 5,486  1,746  3,001 
Other liabilities (1,216) (1,350) (1,117)
Cash Flow Hedges
The following tables present the pre-tax effects of cash flow hedges included in the Company's statements of operations and statements of comprehensive income:
Gain (Loss) on Derivatives Recognized in AOCL
(In thousands) Three Months Ended March
Cash Flow Hedging Relationships 2026 2025
Foreign currency exchange contracts $ 6,758  $ (3,751)
Interest rate swap agreements 2,412  (2,464)
Total $ 9,170  $ (6,215)
Gain (Loss) Reclassified from AOCL into Income
(In thousands) Three Months Ended March
Location of Gain (Loss) 2026 2025
Net revenues $ 594  $ (383)
Cost of goods sold (1,101) (552)
Other expense, net 16  176 
Interest expense 357  419 
Total $ (134) $ (340)
Derivative Contracts Not Designated as Hedges
Any derivative contracts that are not designated as hedges are recorded at fair value in the Company's balance sheets, and changes in the fair values of these contracts are recognized directly in earnings. During the first quarter of 2025, the Company entered into foreign currency exchange contracts totaling $1.3 billion CAD to offset the purchase price of the Acquisition, which were not designated as hedges. Additionally, derivative contracts not designated as hedges include a limited number of cash flow hedges that were deemed ineffective and were de-designated during the three months ended March 2026 and March 2025. Refer to Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.
The Company executes balance sheet hedge contracts to mitigate foreign currency exchange risks related to intercompany loans. The notional amount of these outstanding foreign currency exchange contracts was $99.2 million and $87.5 million at March 2026 and December 2025, respectively.
The following table presents a summary of derivatives not designated as hedges included in the Company's statements of operations:
(In thousands) Location of Gain (Loss) on Derivatives Recognized in Income Gain (Loss) on Derivatives Recognized in Income
Derivatives Not Designated as Hedges Three Months Ended March
2026 2025
Foreign currency exchange contracts Net revenues $ 269  $ — 
Foreign currency exchange contracts Cost of goods sold 23  — 
Foreign currency exchange contracts Other expense, net 385  (8,868)
Total $ 677  $ (8,868)
Other Derivative Information
At March 2026, AOCL included $10.0 million of pre-tax net deferred gains for foreign currency exchange contracts and interest rate swap agreements that are expected to be reclassified to earnings during the next 12 months. The amounts ultimately reclassified to earnings will depend on rates in effect when outstanding derivative contracts are settled.