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 Condensed 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 March 31, 2022 or April 3, 2021.

The effective portion of the gain or loss on the derivative is reported as a component of AOCI and reclassified into the same line within the Condensed Consolidated Statement of Income as the earnings effect of the hedged item 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 March 31, 2022, the Company had $18.2 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. At January 1, 2022, the Company had $5.6 million, net of tax, of derivative gains on closed hedge instruments in AOCI that was subsequently realized in earnings when the hedged items impacted earnings.

As of March 31, 2022, the Company had the following currency forward contracts outstanding (with maturities extending through December 2022) to hedge forecasted foreign currency cash flows (in millions):


	Notional Amount (in US Dollars)
Chinese Renminbi	$	264.0
Mexican Peso	210.4
Euro	209.3
Indian Rupee	59.7
Canadian Dollar	0.1
Australian Dollar	16.4

British Pound	2.0
Thai Baht	1.5

As of March 31, 2022, the Company had the following commodity forward contracts outstanding (with maturities extending through December 2022) to hedge forecasted purchases of commodities (notional amounts expressed in terms of the dollar value of the hedged item (in millions)):

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. The cash proceeds of $16.2 million received to settle the terminated swaps in

March 2022 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.


	March 31, 2022
	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Other Accrued Expenses		Other Noncurrent Liabilities
Designated as Hedging Instruments:

Currency Contracts	$	13.5	$	1.7	$	0.5	$	—
Commodity Contracts	13.8		1.7		0.1		0.1
Not Designated as Hedging Instruments:
Currency Contracts	0.6		—		0.2		—
Commodity Contracts	0.8		0.1		—		—
Total Derivatives	$	28.7	$	3.5	$	0.8	$	0.1


	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 following table presents the effect of derivative instruments on the Condensed Consolidated Statements of Income and Condensed Consolidated Statement of Comprehensive Income (pre-tax) (in millions):


	Three Months Ended
	March 31, 2022								April 3, 2021
	Commodity Forwards		Currency Forwards		Interest Rate Swaps		Total		Commodity Forwards		Currency Forwards		Interest Rate Swaps		Total
Gain Recognized in Other Comprehensive Income (Loss)	$	13.4	$	10.4	$	10.6	$	34.4	$	14.1	$	0.2	$	4.9	$	19.2
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain recognized in Net Sales	—		0.1		—		0.1		—		0.1		—		0.1
Gain Recognized in Cost of Sales	5.2		3.0		—		8.2		5.2		2.6		—		7.8
Gain Recognized in Operating Expenses	—		—		—		—		—		3.5		—		3.5
(Loss) Gain Recognized in Interest Expense	—		—		(0.3)		(0.3)		—		—		0.1		0.1


	Three Months Ended
	March 31, 2022				April 3, 2021
	Commodity Forwards		Currency Forwards		Commodity Forwards		Currency Forwards
Gain recognized in Cost of Sales	$	0.6	$	—	$	0.2	$	—
Gain recognized in Operating Expenses	—		1.5		—		5.8

The net AOCI hedging component balance of a $41.1 million gain at March 31, 2022 includes $28.6 million of net current deferred gain expected to be realized in the next twelve months. The gain/loss reclassified from AOCI into earnings on such derivatives will be recognized in the same period in which the related item affects earnings.

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 Condensed Consolidated Balance Sheets on a gross basis for the periods ended March 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 (in millions):


	March 31, 2022
	Gross Amounts as Presented in the Condensed 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	$	14.1	$	(0.7)	$	13.4
Derivative Commodity Contracts	14.6		(0.1)		14.5
Other Noncurrent Assets:
Derivative Currency Contracts	1.7		—		1.7
Derivative Commodity Contracts	1.8		(0.1)		1.7
Other Accrued Expenses:

Derivative Currency Contracts	0.7		(0.7)		—
Derivative Commodity Contracts	0.1		(0.1)		—
Other Noncurrent Liabilities:

Derivative Commodity Contracts	0.1		(0.1)		—


	January 1, 2022
	Gross Amounts as Presented in the Condensed 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	$	8.6	$	(1.7)	$	6.9
Derivative Commodity Contracts	9.3		(1.2)		8.1
Other Noncurrent Assets:
Derivative Currency Contracts	0.7		—		0.7
Derivative Commodity Contracts	0.1		(0.1)		—
Other Accrued Expenses:
Derivative Currency Contracts	1.7		(1.7)		—
Derivative Commodity Contracts	1.2		(1.2)		—
Other Noncurrent Liabilities:

Derivative Commodity Contracts	0.6		(0.1)		0.5