v3.26.1
Financial Instruments
 6 Months Ended
Jun. 27, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments

7. Financial Instruments

 

We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates and commodities used as raw materials in our products. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. We are subject to credit risk on these contracts equal to the fair value of these instruments. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company.

Raw materials used by the Company are subject to price volatility caused by unpredictable external factors such as supply conditions, geopolitical and economic variables, and weather. As a result, from time to time, we enter into commodity swaps to manage the price risk associated with forecasted purchases of materials used in our operations. We account for these commodity derivatives as economic hedges or cash flow hedges. Changes in the fair value of economic hedges are immediately recognized in current period earnings. Changes in the fair value of cash flow hedges are recorded in other comprehensive income. Amounts deferred in other comprehensive income are reclassified into cost of products sold in the period during which the hedged forecasted purchases affect earnings. The gross notional amount of all commodity derivatives outstanding at June 27, 2026 was $3.8 million. There were no commodity derivatives outstanding at December 27, 2025.

 

We may be exposed to interest rate risk on existing debt or forecasted debt issuance. To mitigate this risk, we may enter into interest rate hedge contracts. There were no outstanding interest rate hedge contracts as of June 27, 2026.

We may enter into foreign currency forward contracts to protect against foreign exchange risks associated with certain existing assets and liabilities, forecasted future cash flows, and net investments in foreign subsidiaries. Foreign exchange contracts related to forecasted future cash flows correspond to the periods of the forecasted transactions, which generally do not exceed 12 to 15 months subsequent to the latest balance sheet date. Our primary foreign currency hedge contracts pertain to the British pound, the Canadian dollar and the Mexican peso. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at June 27, 2026 was $604.8 million. Based on foreign exchange rates as of June 27, 2026, we estimate that $12.0 million of net derivative gains included in Accumulated other comprehensive income as of June 27, 2026 will be reclassified to earnings within the next twelve months.

 

We have entered into cross-currency swap contracts to hedge both our Canadian dollar, Chinese yuan and Euro exposures of the Company's net investments in certain foreign subsidiaries. As of June 27, 2026, the notional value of the cross-currency swap contracts was $153.0 million and the contracts expire at various dates through June 2027. The cross-currency swaps were designated as net investment hedges, with the amount of gain or loss associated with the change in fair value of these instruments included within Accumulated other comprehensive income and recognized upon termination of the respective net investment.

 

For derivative instruments that are designated as fair value hedges, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, are recognized on the same line of the Condensed Consolidated Statements of Comprehensive Income. The changes in the fair value of cash flow hedges are reported in Accumulated other comprehensive income and are recognized in the Condensed Consolidated Statements of Comprehensive Income when the hedged item affects earnings.

 

The fair values of derivative instruments on the Condensed Consolidated Balance Sheets as of June 27, 2026 and December 27, 2025 were as follows:

 

 

 

 

 

Fair Value

 

(In millions)

 

Location

 

June 27, 2026

 

 

December 27, 2025

 

Assets:

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other current assets

 

$

2.4

 

 

$

1.2

 

Net investment hedges

 

Other assets

 

 

1.4

 

 

 

-

 

 

Total assets

 

$

3.8

 

 

$

1.2

 

Liabilities:

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other current liabilities

 

$

1.1

 

 

$

1.6

 

Commodity contracts

 

Other current liabilities

 

 

0.4

 

 

 

-

 

Net investment hedges

 

Other current liabilities

 

 

1.7

 

 

 

2.9

 

 

Total liabilities

 

$

3.2

 

 

$

4.5

 

 

The effects of derivative financial instruments on the statements of comprehensive income for the twenty-six weeks ended June 27, 2026 and June 28, 2025 were as follows:

 

(In millions)

 

Classification and Amount of Gain (Loss)
   Recognized in Income on Hedging Relationships

 

 

 

Twenty-Six Weeks Ended June 27, 2026

 

 

 

Cost of
products sold

 

 

Interest
expense

 

 

Other expense, net

 

Total amounts per Consolidated Statements of Comprehensive Income

 

$

1,138.8

 

 

$

53.9

 

 

$

0.5

 

Gain (loss) on fair value hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Hedged items

 

 

-

 

 

 

-

 

 

 

(1.8

)

Derivative designated as hedging instruments

 

 

-

 

 

 

-

 

 

 

(1.4

)

Gain on net investment hedging relationships

 

 

-

 

 

 

-

 

 

 

1.1

 

Gain (loss) on cash flow hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

0.8

 

 

 

-

 

 

 

-

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

-

 

 

 

-

 

 

 

-

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

-

 

 

 

6.3

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

Classification and Amount of Gain (Loss)
   Recognized in Income on Hedging Relationships

 

 

 

Twenty-Six Weeks Ended June 28, 2025

 

 

 

Cost of
products sold

 

 

Interest
expense

 

 

Other income, net

 

Total amounts per Consolidated Statements of Comprehensive Income

 

$

1,238.7

 

 

$

59.8

 

 

$

8.2

 

Gain (loss) on fair value hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Hedged items

 

 

-

 

 

 

-

 

 

 

4.4

 

Derivative designated as hedging instruments

 

 

-

 

 

 

-

 

 

 

(2.6

)

Gain on net investment hedging relationships

 

 

-

 

 

 

-

 

 

 

1.7

 

Gain (loss) on cash flow hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

-

 

 

 

-

 

 

 

-

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

-

 

 

 

-

 

 

 

-

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

-

 

 

 

6.3

 

 

 

-

 

 

 

The effects of derivative financial instruments on the statements of comprehensive income for the thirteen weeks ended June 27, 2026 and June 28, 2025 were as follows:

 

(In millions)

 

Classification and Amount of Gain (Loss)
   Recognized in Income on Hedging Relationships

 

 

 

Thirteen Weeks Ended June 27, 2026

 

 

 

Cost of
products sold

 

 

Interest
expense

 

 

Other expense, net

 

Total amounts per Consolidated Statements of Comprehensive Income

 

$

563.2

 

 

$

27.4

 

 

$

0.6

 

Gain (loss) on fair value hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Hedged items

 

 

-

 

 

 

-

 

 

 

1.4

 

Derivative designated as hedging instruments

 

 

-

 

 

 

-

 

 

 

(2.9

)

Gain on net investment hedging relationships

 

 

-

 

 

 

-

 

 

 

0.6

 

Gain (loss) on cash flow hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

0.6

 

 

 

-

 

 

 

-

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

-

 

 

 

-

 

 

 

-

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

-

 

 

 

3.2

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

Classification and Amount of Gain (Loss)
   Recognized in Income on Hedging Relationships

 

 

 

Thirteen Weeks Ended June 28, 2025

 

 

 

Cost of
products sold

 

 

Interest
expense

 

 

Other income, net

 

Total amounts per Consolidated Statements of Comprehensive Income

 

$

660.1

 

 

$

31.2

 

 

$

7.3

 

Gain (loss) on fair value hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Hedged items

 

 

-

 

 

 

-

 

 

 

1.4

 

Derivative designated as hedging instruments

 

 

-

 

 

 

-

 

 

 

-

 

Gain on net investment hedging relationships

 

 

-

 

 

 

-

 

 

 

0.7

 

Gain (loss) on cash flow hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

0.4

 

 

 

-

 

 

 

-

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

-

 

 

 

-

 

 

 

-

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

-

 

 

 

3.2

 

 

 

-