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Financial Instruments
−Removed: Financial instruments that potentially subject us to concentrations of credit risk consist principally of temporary cash investments, derivatives, marketable securities and accounts receivable.
−Removed: We believe we had no significant concentrations of credit risk as of January 1, 2023.
+Added: Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, derivatives, marketable securities and accounts receivable.
+Added: We believe we had no significant concentrations of credit risk as of December 31, 2023.
We use derivative instruments as part of our risk management strategy only, and includes derivatives utilized as economic hedges that are not designated as hedging instruments.
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The cash flows related to the settlement of these hedges are included in cash flows from operating activities within our consolidated statements of cash flows.
−Removed: Principal hedged currencies include the Australian Dollar, British Pound, Euro, Indian Rupee, Singapore Dollar and Swedish Krona.
+Added: Principal hedged currencies include the Chinese Renminbi, British Pound, Euro and Singapore Dollar.
We held forward foreign exchange contracts, designated as economic hedges, with U.S.
−Removed: dollar equivalent notional amounts totaling $476.9 million at January 1, 2023, $371.9 million at January 2, 2022, and $808.0 million at January 3, 2021, and the fair value of these foreign currency derivative contracts was insignificant.
+Added: dollar equivalent notional amounts totaling $412.1 million at December 31, 2023 and $476.9 million at January 1, 2023, and the fair value of these foreign currency derivative contracts was insignificant.
The gains and losses realized on these foreign currency derivative contracts are not material.
−Removed: The duration of these contracts was generally 30 days or less during each of fiscal years 2022, 2021 and 2020.
+Added: The duration of these contracts is generally 30 days.
In addition, in connection with certain intercompany loan agreements utilized to finance our acquisitions and stock repurchase program, we enter into forward foreign exchange contracts intended to hedge movements in foreign exchange rates prior to settlement of such intercompany loans denominated in foreign currencies.
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The cash flows related to the settlement of these hedges are included in cash flows from financing activities within our consolidated statements of cash flows.
−Removed: The outstanding forward exchange contracts designated as economic hedges, which were intended to hedge movements in foreign exchange rates prior to the settlement of certain intercompany loan agreements, included combined U.S.
−Removed: Dollar notional amounts of $360.2 million as of January 2, 2022.
−Removed: The net gains and losses on these derivatives, combined with the gains and losses on the remeasurement of the hedged intercompany loans were not material.
−Removed: During fiscal year 2018, we designated a portion of the 2026 Notes to hedge our investments in certain foreign subsidiaries.
+Added: During fiscal year 2018, we designated a portion of the 2026 Notes to hedge its investments in certain foreign subsidiaries.
Unrealized translation adjustments from a portion of the 2026 Notes were included in the foreign currency translation component of accumulated other comprehensive income (“AOCI”), which offsets translation adjustments on the underlying net assets of foreign subsidiaries.
The cumulative translation gains or losses will remain in AOCI until the foreign subsidiaries are liquidated or sold.
−Removed: As of January 1, 2023, the total notional amount of the 2026 Notes that was designated to hedge investments in foreign subsidiaries was €497.2 million.
−Removed: The unrealized foreign exchange (gains) losses recorded in AOCI related to the net investment hedge were $(34.5) million, $33.2 million and $49.6 million during the fiscal years 2022, 2021 and 2020, respectively.
−Removed: We do not expect any material net pre-tax gains or losses to be reclassified from accumulated other comprehensive (loss) income into interest and other expense, net within the next twelve months.
+Added: As of December 31, 2023, the total notional amount of the 2026 Notes that was designated to hedge investments in foreign subsidiaries was €498.6 million.
+Added: The unrealized foreign exchange (gains) losses recorded in AOCI related to the ne t investment hedge were $19.5 million, $34.5 million and $(33.2) million during the fiscal years 2023, 2022 and 2021, respectively.
+Added: We do not expect any material net pre-tax gains or losses to be reclassified from accumulated other comprehensive income (loss) into interest and other expense, net within the next twelve months.
See Note 19, Derivatives and Hedging Activities, in the Notes to Consolidated Financial Statements for a detailed discussion of our derivative instruments and hedging activities.
−Removed: We are exposed to market risk, including changes in interest rates and currency exchange rates.
−Removed: To manage the volatility relating to these exposures, we enter into various derivative transactions pursuant to our policies to hedge against known or forecasted market exposures.
Foreign Exchange Risk.
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Moreover, we are able to partially mitigate the impact that fluctuations in currencies have on our net income as a result of our manufacturing facilities located in countries outside the United States, material sourcing and other spending which occur in countries outside the United States, resulting in natural hedges.
−Removed: Although we attempt to manage our foreign currency exchange risk through the above activities, when the U.S.
+Added: Although we attempt to manage our foreign currency exchange risk through certain hedging activities, when the U.S.
dollar weakens against other currencies in which we transact business, sales and net income will in general be positively but not proportionately impacted.
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Our Value-at-Risk computation is based on the Monte Carlo simulation, utilizing a 95% confidence interval and a holding period of 30 days.
−Removed: As of January 1, 2023, this computation estimated that there is a 5% chance that the market value of the underlying exposures and the corresponding derivative instruments either increase or decrease due to foreign currency fluctuations by more than $3.1 million.
+Added: As of December 31, 2023, this computation estimated that there is a 5% chance that the market value of the underlying exposures and the corresponding derivative instruments either increase or decrease due to foreign currency fluctuations by more than $2.9 million.
This Value-At-Risk measure is consistent with our financial statement disclosures relative to our foreign currency hedging program.
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Interest Rate Risk.
−Removed: As of January 1, 2023 , we had no outstandi ng borrowings under our senior unsecured revolving credit facility.
−Removed: Amounts drawn under our senior unsecured revolving credit facility bear interest at variable rates;
−Removed: all of our other debt bear interest at fixed rates.
−Removed: Our cash and cash equivalents from continuing operations, for which we receive interest at variable rates, were $454.4 million at January 1, 2023.
+Added: As of December 31, 2023, we had no outstanding borrowings under our senior unsecured revolving credit facility which bears interest at a variable rate.
+Added: Substantially all of our debt portfolio is comprised of fixed interest debt.
+Added: As of December 31, 2023, our investments in U.S.
+Added: treasury securities of $689.9 million earn fixed interest rates, however, the invested portion of our cash and cash equivalents, for which we receive interest at variable rates, was $913.2 million.
Fluctuations in interest rates can therefore have a direct impact on both our short-term cash flows, as they relate to interest, and our earnings.
To manage the volatility relating to these exposures, we periodically enter into various derivative transactions pursuant to our policies to hedge against known or forecasted interest rate exposures.
−Removed: However, no such instruments are outstanding at January 1, 2023.
+Added: However, no such instruments are outstanding at December 31, 2023.
Interest Rate Risk—Sensitivity .
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.