Note 8 - Derivative Financial Instruments

12 Months Ended

Dec. 28, 2024

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

8. Derivative Financial Instruments

Economic (Non-Designated) Hedges

We enter into foreign currency forward contracts to manage our foreign exchange exposure related to intercompany transactions and other balance sheet items that are subject to revaluation. For accounting purposes, our foreign currency forward contracts that are not designated as hedging instruments are recorded at fair value as of the end of our reporting period in our consolidated balance sheets with changes in fair value recorded within foreign transaction gain (loss) in our consolidated statements of operations for both realized and unrealized gains and losses. The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability.

The location and amount of losses related to non-designated derivative instruments in the consolidated statements of operations were as follows (in thousands):

Derivatives Not Designated	Location of Gain (Loss)	Fiscal Year
as Hedging Instruments	Recognized on Derivatives	2024			2023			2022
Foreign exchange forward contracts	Foreign transaction gain (loss)	$	(7,542	)	$	(2,127	)	$	(5,356	)

Net Investment Hedges

In the third quarter of fiscal 2024 we began hedging foreign currency risk associated with net investment positions in certain of our foreign subsidiaries. To accomplish this, we enter into foreign currency forward contracts that are designated as hedges of our net investment.

The location and amount of gains from net investment hedges recorded in the foreign currency translation component of accumulated AOCI were as follows (in thousands):

Derivatives Designated	Location of Gain (Loss)	Fiscal Year
as Hedging Instruments	Recognized on Derivatives	2024		2023		2022
Foreign exchange forward contracts	AOCI	$	964		N/A		N/A

Gains recognized in foreign transaction gain (loss), in the consolidated statements of operations for the portion of the net investment hedges excluded from the assessment of hedge effectiveness was $0.7 million for fiscal 2024. Since our net investment hedge program started in fiscal 2024 there were no amounts recorded in fiscal 2023 or fiscal 2022.

Cash flows associated with settlements of our non-designated foreign currency forward contracts are reported in net cash provided by operating activities and our net investment hedges are included in investing activities in our consolidated statements of cash flows.

Fair Value

The fair value of our foreign currency forward contracts was determined based on current foreign currency exchange rates and forward points. All our foreign currency forward contracts outstanding on December 28, 2024 will mature during the first quarter of fiscal 2025.

The following table provides information about our foreign currency forward contracts outstanding as of December 28, 2024 (in thousands):

Currency	Contract Position	Contract Amount (Local Currency)		Contract Amount (U.S. Dollars)
Euro	Buy		27,472		28,700
Swiss Franc	Buy		8,716		9,700
South Korean Won	Buy		2,208,855		1,500
Japanese Yen	Buy		157,380		1,000
Euro	Sell		54,250		60,500
Swiss Franc	Sell		11,752		14,000

Our foreign currency contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that utilize observable market inputs. The fair value of our foreign currency contracts as of December 28, 2024 was immaterial.