Cash Flow Hedges. The primary risks managed by using derivative instruments are the fluctuations in global currencies that will ultimately be used by non-U.S. dollar functional currency subsidiaries to settle future payments of intercompany inventory transactions denominated in U.S. dollars. Specifically, the Company projects future intercompany purchases by its non-U.S. dollar functional currency subsidiaries generally over a period of up to 24 months. The Company enters into forward contracts, generally for up to 85% of the forecasted purchases, to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases. Additionally, the Company enters into forward contracts to manage fluctuations in Japanese yen exchange rates that will be used to settle future third-party inventory component purchases by a U.S. dollar functional currency subsidiary. Forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon settlement date and exchange rate. These forward contracts are designated as single cash flow hedges. Fluctuations in exchange rates will either increase or decrease the Company’s U.S. dollar equivalent cash flows from these inventory transactions, which will affect the Company’s U.S. dollar earnings. Gains or losses on the forward contracts are expected to offset these fluctuations to the extent the cash flows are hedged by the forward contracts.

For a derivative instrument that is designated and qualifies as a cash flow hedge, the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss), net of taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.


Functional Currency		Contract Currency
Type	Amount	Type	Amount
Euro	105.1	U.S. dollar	113.6
Canadian dollar	44.7	U.S. dollar	34.9
Mexican peso	302.3	U.S. dollar	14.7
British pound	7.9	U.S. dollar	10.0
Japanese yen	847.6	U.S. dollar	7.0
Australian dollar	9.6	U.S. dollar	6.8
U.S. dollar	13.4	Japanese yen	1,730.0

Non-designated Hedges. The Company also periodically enters into forward contracts to manage exchange rate risks associated with certain intercompany transactions and for which the Company does not elect hedge accounting treatment. As of October 1, 2022, the Company did not have any non-designated forward contracts. Changes in the fair value of derivatives not designated as hedging instruments are recognized in earnings when they occur.

The following tables disclose the gains and losses on derivative instruments recorded in accumulated other comprehensive income (loss), net of taxes during the term of the hedging relationship and reclassified into earnings, and gains and losses on derivatives not designated as hedging instruments recorded directly to earnings (in thousands):


Derivative Instruments	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Location	Effect of Derivative Instruments	For the 13 Weeks Ended October 1, 2022		For the 13 Weeks Ended October 2, 2021
Forward contracts designated as cash flow hedging instruments	Cost of sales	Total gain (loss) reclassified from accumulated other comprehensive income (loss)	$	3,158	$	689
Forward contracts designated as cash flow hedging instruments	Other income (expense)-net	Total gain (loss) reclassified from accumulated other comprehensive income (loss)	$	1,385	$	518
Forward contracts not designated as hedging instruments	Other income (expense)-net	Total gain (loss) recognized in income	$	(3)	$	61


Derivative Instruments	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Location	Effect of Derivative Instruments	For the 39 Weeks Ended October 1, 2022		For the 39 Weeks Ended October 2, 2021
Forward contracts designated as cash flow hedging instruments	Cost of sales	Total gain (loss) reclassified from accumulated other comprehensive income (loss)	$	6,198	$	938
Forward contracts designated as cash flow hedging instruments	Other income (expense)-net	Total gain (loss) reclassified from accumulated other comprehensive income (loss)	$	2,907	$	(858)
Forward contracts not designated as hedging instruments	Other income (expense)-net	Total gain (loss) recognized in income	$	63	$	(12)

The following table discloses the fair value amounts for the Company’s derivative instruments as separate asset and liability values, presents the fair value of derivative instruments on a gross basis, and identifies the line items in the condensed consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands):


	Asset Derivatives						Liability Derivatives
	October 1, 2022			January 1, 2022			October 1, 2022			January 1, 2022
Derivative Instruments	Condensed Consolidated Balance Sheets Location	Fair Value		Condensed Consolidated Balance Sheets Location	Fair Value		Condensed Consolidated Balance Sheets Location	Fair Value		Condensed Consolidated Balance Sheets Location	Fair Value
Forward contracts designated as cash flow hedging instruments	Prepaid expenses and other current assets	$	13,418	Prepaid expenses and other current assets	$	3,452	Accrued expenses-other	$	1,290	Accrued expenses-other	$	177




Forward contracts designated as cash flow hedging instruments	Intangible and other assets-net	1,171		Intangible and other assets-net	—		Other long-term liabilities	—		Other long-term liabilities	—

Total		$	14,589		$	3,452		$	1,290		$	177


	Effect of Derivative Instruments
	For the 13 Weeks Ended October 1, 2022				For the 13 Weeks Ended October 2, 2021
	Cost of Sales		Other Income (Expense)-net		Cost of Sales		Other Income (Expense)-net
Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded	$	216,651	$	(1,859)	$	232,305	$	(482)
Gain (loss) on cash flow hedging relationships:
Forward contracts designated as cash flow hedging instruments:
Total gain (loss) reclassified from other comprehensive income (loss)	$	3,158	$	1,385	$	689	$	518
Forward contracts not designated as hedging instruments:
Total gain (loss) recognized in income	$	—	$	(3)	$	—	$	61


	Effect of Derivative Instruments
	For the 39 Weeks Ended October 1, 2022				For the 39 Weeks Ended October 2, 2021
	Cost of Sales		Other Income (Expense)-net		Cost of Sales		Other Income (Expense)-net
Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded	$	588,010	$	(1,915)	$	601,857	$	882
Gain (loss) on cash flow hedging relationships:
Forward contracts designated as cash flow hedging instruments:
Total gain (loss) reclassified from other comprehensive income (loss)	$	6,198	$	2,907	$	938	$	(858)
Forward contracts not designated as hedging instruments:
Total gain (loss) recognized in income	$	—	$	63	$	—	$	(12)

At the end of the Third Quarter, the Company had forward contracts designated as cash flow hedges with maturities extending through March 2024. As of October 1, 2022, an estimated net gain of $12.3 million is expected to be reclassified into earnings within the next twelve months at prevailing foreign currency exchange rates.