DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 28, 2024

DERIVATIVE FINANCIAL INSTRUMENTS [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

(7) DERIVATIVE FINANCIAL INSTRUMENTS

The Company manages interest rate risk, commodity price risk, and foreign currency risk related to foreign currency denominated transactions and investments in foreign subsidiaries. Depending on the circumstances, the Company may manage these risks by utilizing derivative financial instruments. Some derivative financial instruments are marked to market and recorded in the Company’s Condensed Consolidated Statements of Operations. Others may be accounted for as fair value, cash flow, or net investment hedges. Derivative financial instruments have credit and market risk. The Company manages these risks by monitoring limits as to the types and degree of risk that can be taken and by entering into transactions with counterparties who are recognized, stable multinational banks. Any gains or losses from net investment hedge activities remain in AOCI until the sale or substantially complete liquidation of the related subsidiaries.

The fair value of derivative instruments as of September 28, 2024 and December 30, 2023 was as follows:

	Condensed Consolidated	September 28,		December 30,
Derivatives designated as hedging instruments:	Balance Sheets location	2024		2023
Commodity contracts	Prepaid expenses and other current assets	$	440	$	2,520
Commodity contracts	Other accrued expenses		(1,635)		(1,586)
Cross currency swap contracts	Prepaid expenses and other current assets		548		1,938
Cross currency swap contracts	Other accrued expenses		(2,711)		(12)
		$	(3,358)	$	2,860

Gains (losses) on derivatives recognized in the Condensed Consolidated Statements of Operations for the thirteen and thirty-nine weeks ended September 28, 2024 and September 30, 2023 were as follows:

	Condensed Consolidated	Thirteen weeks ended				Thirty-nine weeks ended
Derivatives designated	Statements of Operations	September 28,		September 30,		September 28,		September 30,
as hedging instruments:	location	2024		2023		2024		2023
Commodity contracts	Product cost of sales	$	(1,552)	$	(997)	$	(993)	$	(6,060)
Foreign currency forward contracts	Other income (expenses)		—		—		—		177
Interest rate hedge amortization	Interest expense		(16)		(16)		(48)		(48)
Cross currency swap contracts	Interest expense		248		476		934		1,371
		$	(1,320)	$	(537)	$	(107)	$	(4,560)

Cash Flow Hedges

The Company enters into commodity forward, swap, and option contracts that qualify as cash flow hedges of the variability in cash flows attributable to future purchases. The gain (loss) realized upon settlement for each will be recorded in “Product cost of sales” in the Condensed Consolidated Statements of Operations in the period consumed. Notional amounts, purchase quantities, and maturity dates of these contracts as of September 28, 2024 were as follows:

	Notional		Total
Commodity Type	Amount		Purchase Quantity	Maturity Dates
Hot-rolled coil steel	$	15,293	18,500 short tons	September 2024 to April 2025
Natural gas		2,159	543,825 MMBtu	October 2024 to March 2026
Ultra-low-sulfur diesel fuel		1,042	4,410,000 gallons	September 2024 to March 2026

Net Investment Hedges

To mitigate foreign currency risk on the Company’s euro investments and to reduce interest expense, the Company enters into fixed-for-fixed cross currency swaps (“CCS”), swapping U.S. dollar principal and interest payments on a portion of its 5.00% senior unsecured notes due in 2044 for foreign-currency‑denominated payments. Interest is exchanged twice per year on April 1 and October 1.

The Company designated the full initial notional amounts as hedges of the net investment in certain European subsidiaries under the spot method. All changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) are recorded as cumulative foreign currency translation within AOCI. Net interest receipts are recorded as a reduction of interest expense over the life of the CCS.

Key terms of the CCS net investment hedges as of September 28, 2024 were as follows:

	Notional			Swapped	Set Settlement
Currency	Amount		Termination Date	Interest Rate	Amount
Euro	$	80,000	April 1, 2029	3.461%	€	74,509

In the first quarter of fiscal 2024, a euro net investment hedge entered into during fiscal 2019 was early settled. The Company received proceeds of $2,711, which will remain in AOCI until either the sale or substantially complete liquidation of the related subsidiaries.