The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are commodity price risk, currency exchange risk, and interest rate risk. Forward contracts on certain commodities are entered into to manage the price risk associated with forecasted purchases of materials used in the Company's manufacturing process. Forward contracts on certain currencies are entered into to manage forecasted cash flows in certain foreign currencies. Interest rate swaps are utilized to manage interest rate risk associated with the Company's floating rate borrowings.

The Company is exposed to credit losses in the event of non-performance by the counterparties to various financial agreements, including its commodity hedging transactions, foreign currency exchange contracts and interest rate swap agreements. Exposure to counterparty credit risk is managed by limiting counterparties to major international banks and financial institutions meeting established credit guidelines and continually monitoring their compliance with the credit guidelines. The Company does not obtain collateral or other security to support financial instruments subject to credit risk. The Company does not anticipate non-performance by its counterparties, but cannot provide assurances.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. The Company designates commodity forward contracts as cash flow hedges of forecasted purchases of commodities, currency forward contracts as cash flow hedges of forecasted foreign currency cash flows and interest rate swaps as cash flow

hedges of forecasted SOFR-based interest payments. There were no significant collateral deposits on derivative financial instruments as of December 31, 2022 or January 1, 2022.

The effective portion of the gain or loss on the derivative is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or changes in market value of derivatives not designated as hedges are recognized in current earnings.

As of December 31, 2022 and January 1, 2022, the Company had $11.9 million and $5.6 million, net of tax, of derivative gains on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings.

The Company had the following commodity forward contracts outstanding (with maturities extending through May 2024) to hedge forecasted purchases of commodities (notional amounts expressed in terms of the dollar value of the hedged item:

The Company had the following currency forward contracts outstanding (with maturities extending through June 2024) to hedge forecasted foreign currency cash flows:


	December 31, 2022		January 1, 2022

Mexican Peso	$	215.2	$	194.8
Chinese Renminbi	173.8		263.8
Indian Rupee	33.1		64.0
Euro	159.6		208.4
Canadian Dollar	—		0.3
Australian Dollar	—		17.6
Thai Baht	—		2.8

British Pound	2.1		1.3

The Company entered into two receive variable/pay-fixed forward starting non-amortizing interest rate swaps in June 2020, with a total notional amount of $250.0 million which were subsequently terminated in March 2022. The cash proceeds of $16.2 million received to settle the terminated swaps will be recognized as a reduction of interest expense via the effective interest rate method through July 2025 when the terminated swaps were scheduled to expire. The Company entered into two additional receive variable/pay-fixed forward starting non-amortizing interest rate swaps in May 2022, with a total notional amount of $250.0 million to hedge the floating rate interest of the Term Facility. These swaps will expire in March 2027.


	December 31, 2022
	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Other Accrued Expenses		Other Noncurrent Liabilities
Designated as Hedging Instruments:
Interest Rate Swap Contracts	$	—	$	7.9	$	—	$	—
Currency Contracts	12.3		0.9		4.8		—
Commodity Contracts	0.9		0.3		10.2		—
Not Designated as Hedging Instruments:
Currency Contracts	0.7		—		—		—
Commodity Contracts	—		—		0.4		—
Total Derivatives	$	13.9	$	9.1	$	15.4	$	—


	January 1, 2022
	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Other Accrued Expenses		Other Noncurrent Liabilities
Designated as Hedging Instruments:
Interest Rate Swap Contracts	$	—	$	5.3	$	—	$	—
Currency Contracts	8.3		0.7		1.3		—
Commodity Contracts	8.9		0.1		1.2		0.5
Not Designated as Hedging Instruments:
Currency Contracts	0.3		—		0.4		—
Commodity Contracts	0.4		—		—		0.1
Total Derivatives	$	17.9	$	6.1	$	2.9	$	0.6

The effect of derivative instruments designated as cash flow hedges on the Consolidated Statements of Income and Consolidated Statements of Comprehensive Income for fiscal years 2022, 2021 and 2020 were:


	Fiscal 2022
					Interest
	Commodity		Currency		Rate
	Forwards		Forwards		Swaps		Total
(Loss) Gain Recognized in Other Comprehensive Income	$	(23.5)	$	11.4	$	18.2	$	6.1
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain Recognized in Net Sales	—		0.1		—		0.1
Gain Recognized in Cost of Sales	3.5		6.1		—		9.6
Gain Recognized in Operating Expense	—		—		—		—
Gain Recognized in Interest Expense	—		—		1.3		1.3


	Fiscal 2021
					Interest
	Commodity		Currency		Rate
	Forwards		Forwards		Swaps		Total
Gain Recognized in Other Comprehensive Income	$	29.9	$	11.4	$	7.0	$	48.3
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain Recognized in Net Sales	—		0.3		—		0.3
Gain Recognized in Cost of Sales	32.6		16.9		—		49.5
Gain Recognized in Operating Expense	—		2.2		—		2.2
Loss Recognized in Interest Expense	—		—		(0.4)		(0.4)


	Fiscal 2020
					Interest
	Commodity		Currency		Rate
	Forwards		Forwards		Swaps		Total
Gain (Loss) Recognized in Other Comprehensive Loss	$	14.8	$	(3.2)	$	(0.2)	$	11.4
Amounts Reclassified from Other Comprehensive Income (Loss):

Gain (Loss) Recognized in Cost of Sales	1.2		(2.9)		—		(1.7)
Loss Recognized in Operating Expense	—		(8.3)		—		(8.3)
Gain Recognized in Interest Expense	—		—		0.9		0.9

The effect of derivative instruments not designated as cash flow hedges on the Consolidated Statements of Income for fiscal years 2022, 2021 and 2020 were:


	Fiscal 2022
	Commodity Forwards		Currency Forwards		Total
Loss Recognized in Cost of Sales	$	(0.6)	$	—	$	(0.6)
Gain Recognized in Operating Expenses	—		10.2		10.2


	Fiscal 2021
	Commodity Forwards		Currency Forwards		Total
Gain Recognized in Cost of Sales	$	0.2	$	—	$	0.2
Gain Recognized in Operating Expenses	—		7.2		7.2


	Fiscal 2020
	Commodity Forwards		Currency Forwards		Total
Gain Recognized in Cost of Sales	$	0.2	$	—	$	0.2
Loss Recognized in Operating Expenses	—		(8.6)		(8.6)

The AOCI balance related to hedging activities of a $17.3 million gain net of tax as of December 31, 2022 includes $3.7 million of net deferred gains expected to be reclassified to the Consolidated Statement of Comprehensive Income in the next twelve months. There were no gains or losses reclassified from AOCI to earnings based on the probability that the forecasted transaction would not occur.

The Company's commodity and currency derivative contracts are subject to master netting agreements with the respective counterparties which allow the Company to net settle transactions with a single net amount payable by one party to another party. The Company has elected to present the derivative assets and derivative liabilities on the Consolidated Balance Sheets on a gross basis for the periods ended December 31, 2022 and January 1, 2022.

The following table presents the derivative assets and derivative liabilities presented on a net basis under enforceable master netting agreements:


	December 31, 2022
	Gross Amounts as Presented in the Consolidated Balance Sheet		Derivative Contract Amounts Subject to Right of Offset		Derivative Contracts as Presented on a Net Basis
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	13.0	$	(2.5)	$	10.5
Derivative Commodity Contracts	0.9		(0.9)		—
Other Noncurrent Assets:
Derivative Currency Contracts	0.9		—		0.9
Derivative Commodity Contracts	0.3		—		0.3
Other Accrued Expenses:
Derivative Currency Contracts	4.8		(2.5)		2.3
Derivative Commodity Contracts	10.6		(0.9)		9.7