Financial Instruments

3 Months Ended

Mar. 26, 2021

Financial Instruments Disclosures [Abstract]

Financial Instruments

5. FINANCIAL INSTRUMENTS

Derivative Financial Instruments

The Company utilizes foreign currency forward contracts to reduce the risk that its cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company classifies its foreign currency forward within Level 2 of the fair-value hierarchy discussed in Note 4 of the Company’s Condensed Consolidated Financial Statements as the valuation inputs are based on quoted prices and market observable data of similar instruments.

Non-Designated Derivatives

The Company uses foreign currency contracts to economically hedge the functional currency equivalent cash flows of non-U.S. dollar- denominated acquisition. The change in fair value of these derivatives is recorded through earnings in other income (expense), net.

The Company records all derivatives in the Condensed Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation. The following tables show the Company’s derivative instruments at gross fair value as of March 26, 2021 and December 25, 2020.

		March 26, 2021
		Fair Value of		Fair Value of
		Derivatives		Derivatives Not
	Balance Sheet	Designated as		Designated as		Total
(In millions)	Location	Hedge Instruments		Hedge Instruments		Fair Value
Derivative liabilities:
Level 2:
Forward contracts	Other current liabilities	$	0.7	$	—	$	0.7
		December 25, 2020
		Fair Value of		Fair Value of
		Derivatives		Derivatives Not
	Balance Sheet	Designated as		Designated as		Total
(In millions)	Location	Hedge Instruments		Hedge Instruments		Fair Value
Derivative assets
Level 2:
Forward contracts	Prepaid expenses and other	$	-	$	1.1	$	1.1

The effect of derivative instruments in cash flow hedging relationships on income and other comprehensive income (OCI) is summarized below:

	Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect (Effective Portion)
	Three Months Ended
	March 26,		March 27,
(In millions)	2021		2020
Derivatives in Cash Flow Hedging Relationship
Forward contracts	$	0.7	$	—

The amount of gain or loss reclassified from accumulated OCI into income is not significant for the three months ended March 26, 2021 and March 27, 2020.

	Gains (Losses) Recognized in Income on Derivatives
		Three Months Ended
		March 26,			March 27,
(In millions)	Income Statement Location	2021			2020
Derivatives Not Designated As Hedging Instruments
Forward contracts	Other income (expense), net	$	(11.6	)	$	—

In 2020, the Company entered into multiple foreign currency contracts to hedge the functional currency equivalent cash flows related to the non-U.S. dollar-denominated acquisition price of Ham-Let (Israel-Canada) Ltd. (Ham-let). As of March 26, 2021, these contracts were terminated and the $10.4 million liability related to these forward hedge contracts the Company will be required to pay was recorded in other current liabilities in the accompanying Condensed Consolidated Balance Sheets