Derivative Financial Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

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 entered into 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 statement of financial position. 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 LIBOR-based interest payments. There were no significant collateral deposits on derivative financial instruments as of December 31, 2016.

For derivative instruments that are designated and qualify as a cash flow hedge, 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. At December 31, 2016 and January 2, 2016 the Company had $(7.5) million and $(7.4) million, net of tax, of derivative losses on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings.

The Company had outstanding the following notional amounts to hedge forecasted purchases of commodities (in millions):

	December 31, 2016		January 2, 2016
Copper	$	50.7	$	59.4
Aluminum	4.9		4.2

As of December 31, 2016, the maturities of commodity forward contracts extended through December 2017.

The Company had outstanding the following notional amounts of currency forward contracts (in millions):

	December 31, 2016		January 2, 2016
Mexican Peso	$	230.1	$	339.4
Chinese Renminbi	275.5		233.9
Indian Rupee	43.6		54.5
Euro	69.0		68.5
Canadian Dollar	41.8		6.2
Australian Dollar	12.1		10.8
Thai Baht	4.9		3.7
Japanese Yen	2.8		2.7
Great Britain Pound	4.3		4.8
Singapore Dollar	—		0.5

As of December 31, 2016, the maturities of currency forward contracts extended through October 2019.

As of December 31, 2016 and January 2, 2016, the total notional amount of the Company's receive-variable/pay-fixed interest rate swap was $100.0 million (with maturities extending to August 2017).

Fair values of derivative instruments were (in millions):

	December 31, 2016
	Prepaid Expenses		Other Noncurrent Assets		Hedging Obligations (Current)		Hedging Obligations (Noncurrent)
Designated as Hedging Instruments:
Interest Rate Swap Contracts	$	—	$	—	$	3.3	$	—
Currency Contracts	1.3		0.4		39.7		17.6
Commodity Contracts	4.7		—		—		—
Not Designated as Hedging Instruments:
Currency Contracts	1.5		—		6.0		—
Commodity Contracts	2.6		—		—		—
Total Derivatives	$	10.1	$	0.4	$	49.0	$	17.6

	January 2, 2016
	Prepaid Expenses		Other Noncurrent Assets		Hedging Obligations (Current)		Hedging Obligations (Noncurrent)
Designated as Hedging Instruments:
Interest Rate Swap Contracts	$	—	$	—	$	—	$	7.8
Currency Contracts	0.7		0.4		29.9		19.5
Commodity Contracts	0.1		—		8.7		—
Not Designated as Hedging Instruments:
Currency Contracts	0.5		0.6		0.9		0.3
Commodity Contracts	5.1		—		5.2		—
Total Derivatives	$	6.4	$	1.0	$	44.7	$	27.6

Derivatives Designated as Cash Flow Hedging Instruments

The effect of derivative instruments on the consolidated statements of income and comprehensive income for fiscal 2016, 2015 and 2014 were (in millions):

	Fiscal 2016
							Interest
	Commodity			Currency			Rate
	Forwards			Forwards			Swaps			Total
Gain (Loss) Recognized in Other Comprehensive Income (Loss)	$	6.4		$	(46.1	)	$	(0.3	)	$	(40.0	)
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain Recognized in Net Sales	—			0.2			—			0.2
(Loss) Recognized in Cost of Sales	(13.6		)	(32.1		)	—			(45.7		)
(Loss) Recognized in Interest Expense	—			—			(4.8		)	(4.8		)

	Fiscal 2015
							Interest
	Commodity			Currency			Rate
	Forwards			Forwards			Swaps			Total
(Loss) Recognized in Other Comprehensive Income (Loss)	$	(22.3	)	$	(46.5	)	$	(1.1	)	$	(69.9	)
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain Recognized in Net Sales	—			0.2			—			0.2
(Loss) Recognized in Cost of Sales	(19.8		)	(18.5		)	—			(38.3		)
(Loss) Recognized in Interest Expense	—			—			(5.2		)	(5.2		)

	Fiscal 2014
							Interest
	Commodity			Currency			Rate
	Forwards			Forwards			Swaps			Total
(Loss) Recognized in Other Comprehensive Income (Loss)	$	(18.8	)	$	(25.2	)	$	(0.5	)	$	(44.5	)
Amounts Reclassified from Other Comprehensive Income (Loss):
(Loss) Gain Recognized in Cost of Sales	(7.1		)	7.6			—			0.5
(Loss) Recognized in Interest Expense	—			—			(10.3		)	(10.3		)

The ineffective portion of hedging instruments recognized was immaterial for all periods presented.

Derivatives Not Designated as Cash Flow Hedging Instruments

The effect of derivative instruments on the consolidated statements of income for fiscal 2016, 2015 and 2014 were (in millions):

	Fiscal 2016
	Commodity Forwards		Currency Forwards			Total
Gain Recognized in Cost of Sales	$	2.6	$	—		$	2.6
Loss Recognized in Operating Expenses	—		(5.2		)	(5.2		)

	Fiscal 2015
	Commodity Forwards		Currency Forwards			Total
Loss Recognized in Operating Expenses	$	—	$	(8.8	)	$	(8.8	)

	Fiscal 2014
	Commodity Forwards		Currency Forwards			Total
Loss Recognized in Cost of Sales	$	—	$	(1.3	)	$	(1.3	)

The net AOCI balance related to hedging activities of $(41.1) million losses at December 31, 2016 includes $(24.1) million of net deferred losses expected to be reclassified to the Statement of 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, 2016 and January 2, 2016.

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

	December 31, 2016
	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	$	2.8	$	(1.7	)	$	1.1
Derivative Commodity Contracts	7.3		—			7.3
Other Non-Current Assets:
Derivative Currency Contracts	0.4		(0.2		)	0.2
Hedging Obligations Current:
Derivative Currency Contracts	45.7		(1.7		)	44.0
Hedging Obligations:
Derivative Currency Contracts	17.6		(0.2		)	17.4

	January 2, 2016
	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	$	1.2	$	(1.2	)	$	—
Derivative Commodity Contracts	5.2		(5.2		)	—
Other Noncurrent Assets:
Derivative Currency Contracts	1.0		(1.0		)	—
Hedging Obligations Current:
Derivative Currency Contracts	30.8		(1.2		)	29.6
Derivative Commodity Contracts	13.9		(5.2		)	8.7
Hedging Obligations:
Derivative Currency Contracts	19.8		(1.0		)	18.8