The Company’s business is exposed to risk resulting from fluctuations in interest rates on certain LIBOR-based variable rate debt. Increases in interest rates would increase interest expenses relating to the outstanding variable rate borrowings and increase the cost of debt. Fluctuations in interest rates can also lead to significant fluctuations in the fair value of the debt obligations.

On May 15, 2018, the Company entered into a four-year pay-fixed, receive floating (1-month LIBOR), interest rate swap arrangement with a notional amount of $400,000 for the period beginning June 1, 2018 and ending on June 1, 2022. Under the terms of the interest rate swap, the Company pays a fixed rate of 2.84% against a portion of its LIBOR-based debt and receives floating 1-month LIBOR during the swap period.

At inception, the Company designated the interest rate swap as a cash flow hedge and the fair value of the interest rate swap was zero. As of January 3, 2022, the fair value of the interest rate swap was recorded as a liability in the amount of $4,295 and included as a component of other current liabilities. The change in the fair value of the interest rate swap is recorded as a component of accumulated other comprehensive loss, net of tax, in the Company’s consolidated balance sheets. No ineffectiveness was recognized for the years ended January 3, 2022 and December 28, 2020. During the year ended January 3, 2022, the interest rate swap increased interest expense by $11,272.

The Company’s foreign subsidiaries may at times purchase forward exchange contracts to manage their foreign currency risks in relation to certain purchases of machinery denominated in foreign currencies other than the Company’s functional currencies. There were no forward exchange contracts as of January 3, 2022. As of December 28, 2020, the notional amount of the foreign exchange contracts was approximately $1,181 (JPY 125.0 million). The Company has designated certain of these foreign exchange contracts as cash flow hedges.

The Company uses various raw materials in the manufacturing of PCBs. In particular, the Company has been experiencing increasing prices and lead times of copper clad laminates (CCLs), a key raw material for the manufacture of PCBs. CCLs are made from epoxy resin, glass cloth and copper foil, all of which are seeing limited supply and resulting increased prices. The Company only buys a small amount of copper directly. However, copper is a major driver of laminate cost. As such, the Company enters into commodity contracts to hedge copper as a proxy for hedging laminate. As of January 3, 2022, the Company has commodity contracts with a notional quantity of (i) 0.5 metric tonnes each for the period beginning January 4, 2022 and ending on March 31, 2022, (ii) 0.5 metric tonnes for the period beginning April 5, 2022 and ending on June 29, 2022, (iii) 0.6 metric tonnes for the period beginning June 30, 2022 and ending on October 3, 2022, and (iv) 0.7 metric tonnes for the period beginning October 4, 2022 and ending on January 3, 2023. As of January 3, 2022, the fair value of the commodity contracts was recorded as an asset in the amount of $297 and included as a component of prepaid expenses and other current assets. The changes in the fair value of these commodity contracts are recorded in cost of goods sold in the consolidated statements of operations. The commodity contracts decreased cost of goods sold by $297 for the year ended January 3, 2022. These commodity contracts are not designated as accounting hedges.

The fair values of derivative instruments in the consolidated balance sheets are as follows:

		Asset/(Liability) Fair Value
	Balance Sheet Location	January 3, 2022			December 28, 2020
		(In thousands)
Cash flow derivative instruments designated as hedges:
Interest rate swap	Other current liabilities	$	(4,295	)	$	—
Interest rate swap	Other long-term liabilities		—			(14,968	)
Cash flow derivative instruments not designated as hedges:
Foreign exchange contracts	Prepaid expenses and other current assets		—			28
Commodity contracts	Prepaid expenses and other current assets		297			—

The following table provides information about the amounts recorded in accumulated other comprehensive loss related to derivatives designated as cash flow hedges, as well as the amounts recorded in each caption in the consolidated statements of operations when derivative amounts are reclassified out of accumulated other comprehensive loss for the years ended January 3, 2022, December 28, 2020 and December 30, 2019:

		For the Year Ended
		January 3, 2022						December 28, 2020						December 30, 2019
	Financial Statement Caption	Loss Recognized in Other Comprehensive Loss			Loss Reclassified into Income			Loss Recognized in Other Comprehensive Loss			Loss Reclassified into Income			Loss Recognized in Other Comprehensive Loss			Loss Reclassified into Income
		(In thousands)
Cash flow hedge:
Interest rate swap	Interest expense	$	(599	)	$	(11,272	)	$	(11,843	)	$	(8,942	)	$	(9,647	)	$	(2,315	)

The following table provides a summary of the activity associated with the designated cash flow hedges reflected in accumulated other comprehensive loss for the years ended January 3, 2022, December 28, 2020 and December 30, 2019:

	For the Year Ended
	January 3,			December 28,			December 30,
	2022			2020			2019
	(In thousands)
Beginning balance, net of tax	$	(11,231	)	$	(9,617	)	$	(4,214	)
Changes in fair value loss, net of tax		(515	)		(8,718	)		(7,296	)
Reclassification to earnings		8,523			6,720			1,893
Derecognition of unrealized losses on cash flow hedge due to sale of Mobility business unit	—				384		—
Ending balance, net of tax	$	(3,223	)	$	(11,231	)	$	(9,617	)

Based on the current yield curve, the Company expects that losses of approximately $3,999 of the accumulated other comprehensive loss will be reclassified into the statement of operations, net of tax, in the next twelve months.