DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 29, 2025

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

(6) DERIVATIVE FINANCIAL INSTRUMENTS

The Company manages risks related to interest rates, commodity prices, and foreign currency, particularly those arising from foreign currency denominated transactions and investments in foreign subsidiaries. To address these risks, the Company may use derivative financial instruments. Depending on their classification, some derivatives are marked to market and recorded in the Company’s Condensed Consolidated Statements of Earnings, while others are accounted for as fair value, cash flow, or net investment hedges.

Derivative financial instruments inherently carry credit and market risks, which the Company mitigates by monitoring exposure limits and transacting with recognized, stable multinational banks as counterparties. Gains or losses from net investment hedge activities remain in AOCI until the related subsidiaries are sold or substantially liquidated.

The fair value of derivative instruments as of March 29, 2025 and December 28, 2024 was as follows:

	Condensed Consolidated	March 29,		December 28,
Derivatives designated as hedging instruments:	Balance Sheets location	2025		2024
Commodity contracts	Prepaid expenses and other current assets	$	1,715	$	617
Commodity contracts	Other accrued expenses		—		(371)
Cross-currency swap contracts	Prepaid expenses and other current assets		—		1,074
Cross-currency swap contracts	Other accrued expenses		(431)		—
		$	1,284	$	1,320

Gains (losses) on derivatives recognized in the Condensed Consolidated Statements of Earnings for the thirteen weeks ended March 29, 2025 and March 30, 2024 were as follows:

		Thirteen weeks ended
	Condensed Consolidated	March 29,		March 30,
Derivatives designated as hedging instruments:	Statements of Earnings location	2025		2024
Commodity contracts	Product cost of sales	$	(1,236)	$	956
Interest rate hedge amortization	Interest expense		(16)		(16)
Cross-currency swap contracts	Interest expense		281		380
		$	(971)	$	1,320

Cash Flow Hedges

The Company enters into commodity forward, swap, and option contracts to hedge variability in cash flows related to future purchases. Gains (losses) realized upon settlement are recorded in “Product cost of sales” in the Condensed Consolidated Statements of Earnings in the period in which the hedged items are consumed. As of March 29, 2025, the details of these contracts were as follows:

	Notional		Total
Commodity Type	Amount		Purchase Quantity	Maturity Dates
Hot-rolled coil steel	$	18,741	23,000 short tons	March 2025 to December 2025
Natural gas		864	227,000 MMBtu	April 2025 to March 2026
Ultra-low-sulfur diesel fuel		11,827	5,166,000 gallons	March 2025 to December 2026

Net Investment Hedges

To manage foreign currency risk associated with its euro investments and reduce interest expenses, the Company uses fixed-for-fixed cross-currency swaps (“CCS”). These swaps convert U.S. dollar-denominated principal and interest payments on a portion of its 5.00% senior unsecured notes due in 2044 into euro‑denominated payments. Interest payments are exchanged biannually on April 1 and October 1.

The Company designated the full notional amounts of its CCS as net investment hedges for certain European subsidiaries under the spot method. Changes in fair value of the CCS attributable to spot exchange rates are recorded as cumulative foreign currency translation within AOCI, while net interest receipts reduce interest expense over the life of the CCS. Key terms as of March 29, 2025 were as follows:

	Notional			Swapped	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, the Company early settled a euro net investment hedge entered in fiscal 2019, receiving proceeds of $2,711. These proceeds will remain in AOCI until the related subsidiaries are sold or substantially liquidated.