FINANCIAL INSTRUMENTS:

Disclosures relating to the nature and extent of the Company’s exposure to risks arising from financial instruments, including credit risk, liquidity risk, foreign currency risk and interest rate risk, as well as risks arising from commodity prices, and how the Company manages those risks, are included in the section entitled “Financial risk management” of the Management’s Discussion and Analysis of the Company’s operations, financial performance and financial position as at December 29, 2019 and December 30, 2018. Accordingly, these disclosures are incorporated into these consolidated financial statements by cross-reference.


(a)	Financial instruments - carrying amounts and fair values:

The carrying amounts and fair values of financial assets and liabilities included in the consolidated statements of financial position are as follows:



	December 29, 2019		December 30, 2018


Financial assets
Amortized cost:
Cash and cash equivalents	$	64,126	$	46,657
Trade accounts receivable	320,931		317,159
Financial assets included in prepaid expenses, deposits and other current assets	45,950		39,789
Long-term non-trade receivables included in other non-current assets	2,933		2,771
Derivative financial assets included in prepaid expenses, deposits and other current assets	9,816		17,792

Financial liabilities
Amortized cost:
Accounts payable and accrued liabilities ⁽¹⁾	$	395,564	$	332,543
Long-term debt - bearing interest at variable rates	645,000		469,000
Long-term debt - bearing interest at fixed rates ⁽²⁾	200,000		200,000
Derivative financial liabilities included in accounts payable and accrued liabilities	11,067		14,442

(1) Accounts payable and accrued liabilities include balances payable of $39.6 million (December 30, 2018 - $33.0 million) under supply-chain financing arrangements (reverse factoring) with a financial institution, whereby receivables due from the Company to certain suppliers can be collected by the suppliers from a financial institution before their original due date. These balances are classified as accounts payable and accrued liabilities and the related payments as cash flows from operating activities, given the principal business purpose of the arrangement is to provide funding to the supplier and not the Company, the arrangement does not significantly extend the payment terms beyond the normal terms agreed with other suppliers, and no additional deferral or special guarantees to secure the payments are included in the arrangement.

(2) The fair value of the long-term debt bearing interest at fixed rates was $206.4 million as at December 29, 2019 (December 30, 2018 - $189.5 million).

Short-term financial assets and liabilities

The Company has determined that the fair value of its short-term financial assets and liabilities approximates their respective carrying amounts as at the reporting dates due to the short-term maturities of these instruments, as they bear variable interest-rates or because the terms and conditions are comparable to current market terms and conditions for similar items.

Non-current assets and long-term debt bearing interest at variable rates

The fair values of the long-term non-trade receivables included in other non-current assets and the Company’s long-term debt bearing interest at variable rates also approximate their respective carrying amounts because the interest rates applied to measure their carrying amounts approximate current market interest rates.

14. FINANCIAL INSTRUMENTS (continued):


(a)	Financial instruments - carrying amounts and fair values (continued):

Long-term debt bearing interest at fixed rates

The fair value of the long-term debt bearing interest at fixed rates is determined using the discounted future cash flows method and at discount rates based on yield to maturities for similar issuances. The fair value of the long-term debt bearing interest at fixed rates was measured using Level 2 inputs in the fair value hierarchy. In determining the fair value of the long-term debt bearing interest at fixed rates, the Company takes into account its own credit risk and the credit risk of the counterparties.

Derivatives

Derivative financial instruments are designated as effective hedging instruments and consist of foreign exchange and commodity forward, option, and swap contracts, as well as floating-to-fixed interest rate swaps to fix the variable interest rates on a designated portion of borrowings under the term loan and unsecured notes. The fair value of the forward contracts is measured using a generally accepted valuation technique which is the discounted value of the difference between the contract’s value at maturity based on the rate set out in the contract and the contract’s value at maturity based on the rate that the counterparty would use if it were to renegotiate the same contract terms at the measurement date under current conditions. The fair value of the option contracts is measured using option pricing models that utilize a variety of inputs that are a combination of quoted prices and market-corroborated inputs, including volatility estimates and option adjusted credit spreads. The fair value of the interest rate swaps is determined based on market data, by measuring the difference between the fixed contracted rate and the forward curve for the applicable floating interest rates.

The Company also has a total return swap (“TRS”) outstanding that is intended to reduce the variability of net earnings associated with deferred share units, which are settled in cash. The TRS is not designated as a hedging instrument and, therefore, the fair value adjustment at the end of each reporting period is recognized in selling, general and administrative expenses. The fair value of the TRS is measured by reference to the market price of the Company’s common shares, at each reporting date. The TRS has a one-year term, may be extended annually, and the contract allows for early termination at the option of the Company. As at December 29, 2019, the notional amount of TRS outstanding was 216,727 shares (December 30, 2018 - 259,897 shares) and the carrying amount and fair value included in prepaid expenses, deposits and other current assets was $0.3 million (December 30, 2018 - $0.6 million included in accounts payable and accrued liabilities).

Derivative financial instruments were measured using Level 2 inputs in the fair value hierarchy. In determining the fair value of derivative financial instruments the Company takes into account its own credit risk and the credit risk of the counterparties.

(b) Derivative financial instruments - hedge accounting:

During fiscal 2019 and 2018, the Company entered into foreign exchange and commodity forward, option, and swap contracts in order to minimize the exposure of forecasted cash inflows and outflows in currencies other than the U.S. dollar and to manage its exposure to movements in commodity prices, as well as floating-to-fixed interest rate swaps to fix the variable interest rates on a designated portion of borrowings under the term loan and unsecured notes.

The forward foreign exchange contracts were designated as cash flow hedges and qualified for hedge accounting. The forward foreign exchange contracts outstanding as at December 29, 2019 and December 30, 2018 consisted primarily of contracts to reduce the exposure to fluctuations in Canadian dollars, Euros, Australian dollars, Pounds sterling, and Mexican pesos against the U.S. dollar.

The commodity forward, option, and swap contracts were designated as cash flow hedges and qualified for hedge accounting. The commodity contracts outstanding as at December 29, 2019 and December 30, 2018 consisted primarily of forward, collar, and swap contracts to reduce the exposure to movements in commodity prices.

The floating-to-fixed interest rate swaps were designated as cash flow hedges and qualified for hedge accounting. The floating-to-fixed interest rate swaps contracts outstanding as at December 29, 2019 and December 30, 2018 served to fix the variable interest rates on the designated interest payments of a portion of the Company's long-term debt.

14. FINANCIAL INSTRUMENTS (continued):

(b) Derivative financial instruments - hedge accounting (continued):

The following table summarizes the Company’s commitments to buy and sell foreign currencies (cash flow hedges) as at December 29, 2019:



									Carrying and fair value							Maturity
		Notional foreign		Average		Notional			Prepaid expenses,			Accounts
		currency amount		exchange		U.S. $			deposits and other			payable and				0 to 12
		equivalent		rate		equivalent			current assets			accrued liabilities				months

Forward foreign exchange contracts:
	Sell GBP/Buy USD		32,737		1.2750		$	41,739		$	187		$	(1,169	)	$	(982	)
	Sell EUR/Buy USD		35,236		1.1341		39,960			502			(78		)	424
	Sell CAD/Buy USD		58,212		0.7612		44,309			49			(130		)	(81		)
	Buy CAD/Sell USD		31,287		0.7514		23,510			342			—			342
	Sell AUD/Buy USD		7,691		0.6974		5,364			38			(32		)	6
	Sell MXN/Buy USD		272,914		0.0504		13,761			—			(356		)	(356		)
							$	168,643		$	1,118		$	(1,765	)	$	(647	)

The following table summarizes the Company’s commitments to buy and sell foreign currencies (cash flow hedges) as at December 30, 2018:



									Carrying and fair value							Maturity
		Notional foreign		Average		Notional			Prepaid expenses,			Accounts
		currency amount		exchange		U.S. $			deposits and other			payable and				0 to 12
		equivalent		rate		equivalent			current assets			accrued liabilities				months

Forward foreign exchange contracts:
	Sell GBP/Buy USD		28,510		1.3224		$	37,703		$	1,366		$	—		$	1,366
	Sell EUR/Buy USD		31,578		1.1892		37,551			1,004			(19		)	985
	Sell CAD/Buy USD		33,114		0.7784		25,776			1,369			—			1,369
	Buy CAD/Sell USD		62,921		0.7583		47,712			—			(1,180		)	(1,180		)
	Sell AUD/Buy USD		7,941		0.7304		5,800			198			—			198
	Buy MXN/Sell USD		79,275		0.0475		3,766			162			—			162
							$	158,308		$	4,099		$	(1,199	)	$	2,900

14. FINANCIAL INSTRUMENTS (continued):

(b) Derivative financial instruments - hedge accounting (continued):

The following table summarizes the Company's commodity contracts outstanding (cash flow hedges) as at December 29, 2019:



			Carrying and fair value								Maturity
				Prepaid expenses,			Accounts
	Type of			deposits and other			payable and				0 to 12
	commodity	Notional amount ⁽¹⁾		current assets			accrued liabilities				months

Forward contracts	Cotton	133.7 million pounds			$	3,494		$	(198	)	$	3,296
Swap contracts	Synthetic fibres	60.6 million pounds			—			(6,859		)	(6,859		)
Swap & option contracts	Energy	202,400 barrels			1,185			(186		)	999
					$	4,679		$	(7,243	)	$	(2,564	)

(1) Notional amounts are not in thousands.

The following table summarizes the Company's commodity contracts outstanding (cash flow hedges) as at December 30, 2018:



			Carrying and fair value								Maturity
				Prepaid expenses,			Accounts
	Type of			deposits and other			payable and				0 to 12
	commodity	Notional amount ⁽¹⁾		current assets			accrued liabilities				months

Forward contracts	Cotton	76.0 million pounds			$	336		$	(3,173	)	$	(2,837	)
Swap contracts	Synthetic fibres	147.7 million pounds			—			(5,516		)	(5,516		)
Swap & option contracts	Energy	290,000 barrels			145			(2,469		)	(2,324		)
					$	481		$	(11,158	)	$	(10,677	)

(1) Notional amounts are not in thousands.

The total notional amount of commodity contracts outstanding as at December 30, 2018 for which hedge accounting was not applied is 81.2 million pounds. The carrying and fair value of these contracts are recorded as prepaid expenses, deposits and other current assets ($0.3 million) and accounts payable and accrued liabilities ($1.0 million).

14. FINANCIAL INSTRUMENTS (continued):

(b) Derivative financial instruments - hedge accounting (continued):

The following table summarizes the Company’s floating-to-fixed interest rate swap contracts outstanding (cash flow hedges) as at December 29, 2019:



								Carrying and fair value
	Notional							Prepaid expenses,			Accounts
	amount of		Maturity		Fixed		Floating	deposits and other			payable and
	borrowings		date	Pay / Receive	rate		rate	current assets			accrued liabilities
Term Loan⁽¹⁾
	$	150,000	June 17, 2021	Pay fixed rate / receive floating rate	0.96	%	US LIBOR		$	1,379		$	—
	75,000		April 30, 2023	Pay fixed rate / receive floating rate	2.85	%	US LIBOR		—			(1,817		)
	50,000		April 30, 2024	Pay fixed rate / receive floating rate	1.51	%	US LIBOR		252			(242		)
Unsecured Notes
	50,000		August 25, 2023	Pay fixed rate / receive floating rate	1.18	%	US LIBOR		866			—
	50,000		August 25, 2026	Pay fixed rate / receive floating rate	1.34	%	US LIBOR		1,179			—
									$	3,676		$	(2,059	)

(1) The notional amounts for the interest rate swap contracts maturing on April 30, 2023 and April 30, 2024 are extensions to the $150 million interest rate swap contracts originally entered into related to the term loan and maturing on June 17, 2021.

The following table summarizes the Company’s floating-to-fixed interest rate swap contracts outstanding (cash flow hedges) as at December 30, 2018:



								Carrying and fair value
	Notional							Prepaid expenses,			Accounts
	amount of		Maturity		Fixed		Floating	deposits and other			payable and
	borrowings		date	Pay / Receive	rate		rate	current assets			accrued liabilities
Term Loan⁽¹⁾
	$	150,000	June 17, 2021	Pay fixed rate / receive floating rate	0.96	%	US LIBOR		$	5,500		$	—
	75,000		April 30, 2023	Pay fixed rate / receive floating rate	2.85	%	US LIBOR		—			(521		)
Unsecured Notes
	50,000		August 25, 2023	Pay fixed rate / receive floating rate	1.18	%	US LIBOR		3,070			—
	50,000		August 25, 2026	Pay fixed rate / receive floating rate	1.34	%	US LIBOR		4,382			—
									$	12,952		$	(521	)

(1) The notional amounts for the interest rate swap contracts maturing on April 30, 2023 are extensions to the $150 million interest rate swap contracts originally entered into related to the term loan and maturing on June 17, 2021.

14. FINANCIAL INSTRUMENTS (continued):

(b) Derivative financial instruments - hedge accounting (continued):

The following table summarizes the Company’s hedged items as at December 29, 2019:



							Change in
		Carrying amount of					value used for			Cash flow
			the hedged item				calculating hedge			hedge reserve
			Assets		Liabilities		ineffectiveness			(AOCI)

Cash flow hedges:

Foreign currency risk:
	Forecast sales		$	—	$	—	$	(972	)	$	972
	Forecast expenses		—		—		342			(342		)

Commodity risk:
	Forecast purchases		—		—		(1,416		)	1,416

Interest rate risk:
	Forecast interest payments		—		—		1,511			(1,511		)
			$	—	$	—	$	(535	)	$	535

No ineffectiveness was recognized in net earnings as the change in value of the hedging instrument used for calculating ineffectiveness was the same or smaller as the change in value of the hedged items used for calculating the ineffectiveness.

The following table summarizes the Company’s hedged items as at December 30, 2018:



							Change in
		Carrying amount of					value used for			Cash flow
			the hedged item				calculating hedge			hedge reserve
			Assets		Liabilities		ineffectiveness			(AOCI)

Cash flow hedges:

Foreign currency risk:
	Forecast sales		$	—	$	—	$	2,752		$	(2,752	)
	Forecast expenses		—		—		(897		)	897

Commodity risk:
	Forecast purchases		—		—		(10,677		)	10,677

Interest rate risk:
	Forecast interest payments		—		—		12,204			(12,204		)
			$	—	$	—	$	3,382		$	(3,382	)

14. FINANCIAL INSTRUMENTS (continued):


(c)	Financial expenses, net:



	2019			2018

Interest expense on financial liabilities recorded at amortized cost⁽¹⁾	$	28,659		$	24,757
Bank and other financial charges	8,010			7,472
Interest accretion on discounted lease obligations	3,141			—
Interest accretion on discounted provisions	287			299
Foreign exchange gain	(929		)	(1,483		)
	$	39,168		$	31,045

(1) Net of capitalized borrowing costs of $1.3 million (2018 - $0.7 million).


(d)	Hedging components of other comprehensive income (“OCI”):



	2019			2018

Net gain (loss) on derivatives designated as cash flow hedges:
Foreign currency risk	$	4,566		$	6,740
Commodity price risk	(8,213		)	698
Interest rate risk	(10,588		)	102

Income taxes	(46		)	(67		)

Amounts reclassified from OCI to inventory, related to commodity price risk	16,656			(13,303		)

Amounts reclassified from OCI to net earnings, related to foreign currency risk and interest rate risk, and included in:
Net sales	(5,667		)	(1,864		)
Cost of sales	(350		)	(307		)
Selling, general and administrative expenses	417			51
Financial expenses, net	(752		)	(2,224		)
Income taxes	60			16
Cash flow hedging loss	$	(3,917	)	$	(10,158	)

The change in the time value element of option and swap contracts designated as cash flow hedges to reduce the exposure in movements of commodity prices was not significant for the years ended December 29, 2019 and December 30, 2018.

The change in the forward element of derivatives designated as cash flow hedges to reduce foreign currency risk was not significant for the years ended December 29, 2019 and December 30, 2018.

Approximately $1.5 million of net losses presented in accumulated other comprehensive income are expected to be reclassified to inventory or net earnings within the next twelve months.