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FINANCIAL INSTRUMENTS | 12 Months Ended
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Jan. 02, 2022
Financial Instruments [Abstract] |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS: (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:
| January 2, 2022 |  | January 3, 2021
Financial assets |  |  |
Amortized cost: |  |  |
Cash and cash equivalents | $ | 179,246 |  |  | $ | 505,264 |
Trade accounts receivable | 329,967 |  |  | 196,480 |
Financial assets included in prepaid expenses, deposits and other current assets | 69,995 |  |  | 88,781 |
Long-term non-trade receivables included in other non-current assets | 390 |  |  | 1,435 |
Derivative financial assets included in prepaid expenses, deposits and other current assets | 62,758 |  |  | 4,947 |
Financial liabilities |  |  |
Amortized cost: |  |  |
Accounts payable and accrued liabilities (1) | $ | 436,073 |  |  | $ | 326,069 |
Long-term debt - bearing interest at variable rates | 400,000 |  |  | 800,000 |
Long-term debt - bearing interest at fixed rates (2) | 200,000 |  |  | 200,000 |
Derivative financial liabilities included in accounts payable and accrued liabilities | 4,328 |  |  | 17,653 |
1) Accounts payable and accrued liabilities include $18.1 million (January 3, 2021 - $27.6 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. Accounts payable and accrued liabilities also include balances payable of $48.8 million (January 3, 2021 - $20.0 million) resulting mainly from a one-week timing difference between the collection of sold receivables and the weekly remittance to our bank counterparty under our receivables purchase agreement that is disclosed in note 7 to these consolidated financial statements. 2) The fair value of the long-term debt bearing interest at fixed rates was $212.2 million as at January 2, 2022 (January 3, 2021 - $221.3 million). 15. FINANCIAL INSTRUMENTS (continued): (a)Financial instruments - carrying amounts and fair values (continued): 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. 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 January 2, 2022, the notional amount of TRS outstanding was 319,639 shares (January 3, 2021 - 284,663 shares) and the carrying amount and fair value included in prepaid expenses, deposits and other current assets was $0.03 million (January 3, 2021 - $0.4 million included in prepaid expenses, deposits and other current assets). 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. 15. FINANCIAL INSTRUMENTS (continued): (b)Derivative financial instruments - hedge accounting: During fiscal 2021 and 2020, 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 January 2, 2022 and January 3, 2021 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 January 2, 2022 and January 3, 2021 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 January 2, 2022 and January 3, 2021 served to fix the variable interest rates on the designated interest payments of a portion of the Company's long-term debt. The following table summarizes the Company’s commitments to buy and sell foreign currencies (cash flow hedges) as at January 2, 2022:
|  |  |  |  |  |  | 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 |  | 26,752 |  |  | 1.3769 |  |  | $ | 36,834 |  |  | $ | 808 |  |  | $ | (54) |  |  | $ | 754 |
| Sell EUR/Buy USD |  | 29,390 |  |  | 1.1916 |  |  | 35,020 |  |  | 1,592 |  |  | — |  |  | 1,592 |
| Sell CAD/Buy USD |  | 39,274 |  |  | 0.8015 |  |  | 31,478 |  |  | 665 |  |  | — |  |  | 665 |
| Buy CAD/Sell USD |  | 31,016 |  |  | 0.7840 |  |  | 24,316 |  |  | 92 |  |  | (88) |  |  | 4 |
| Sell AUD/Buy USD |  | 8,885 |  |  | 0.7427 |  |  | 6,599 |  |  | 161 |  |  | (13) |  |  | 148 |
| Sell MXN/Buy USD |  | 151,791 |  |  | 0.0480 |  |  | 7,279 |  |  | 39 |  |  | (11) |  |  | 28 |
|  |  |  |  |  |  | $ | 141,526 |  |  | $ | 3,357 |  |  | $ | (166) |  |  | $ | 3,191 |
The following table summarizes the Company’s commitments to buy and sell foreign currencies (cash flow hedges) as at January 3, 2021:
|  |  |  |  |  |  | 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 |  | 33,069 |  |  | 1.3090 |  |  | $ | 43,287 |  |  | $ | — |  |  | $ | (1,784) |  |  | $ | (1,784) |
| Sell EUR/Buy USD |  | 33,571 |  |  | 1.1816 |  |  | 39,668 |  |  | — |  |  | (1,736) |  |  | (1,736) |
| Sell CAD/Buy USD |  | 45,591 |  |  | 0.7594 |  |  | 34,623 |  |  | — |  |  | (1,111) |  |  | (1,111) |
| Buy CAD/Sell USD |  | 21,669 |  |  | 0.7077 |  |  | 15,336 |  |  | 1,626 |  |  | — |  |  | 1,626 |
| Sell AUD/Buy USD |  | 7,387 |  |  | 0.7218 |  |  | 5,332 |  |  | — |  |  | (346) |  |  | (346) |
| Sell MXN/Buy USD |  | 168,727 |  |  | 0.0455 |  |  | 7,683 |  |  | 28 |  |  | (693) |  |  | (665) |
|  |  |  |  |  |  | $ | 145,929 |  |  | $ | 1,654 |  |  | $ | (5,670) |  |  | $ | (4,016) |
15. 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 January 2, 2022:
|  |  |  | 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 | 251.0 million pounds |  |  | $ | 56,419 |  |  | $ | — |  |  | $ | 56,419 |
Swap & option contracts | Energy | 5.7 million gallons |  |  | 1,660 |  |  | (102) |  |  | 1,558 |
|  |  |  |  |  | $ | 58,079 |  |  | $ | (102) |  |  | $ | 57,977 |
(1) Notional amounts are not in thousands. The following table summarizes the Company's commodity contracts outstanding (cash flow hedges) as at January 3, 2021:
|  |  |  | 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 | 16.2 million pounds |  |  | $ | 1,582 |  |  | $ | — |  |  | $ | 1,582 |
Swap contracts | Synthetic fibres | 3.9 million pounds |  |  | — |  |  | (781) |  |  | (781) |
Swap & option contracts | Energy | 6.4 million gallons |  |  | 1,300 |  |  | (258) |  |  | 1,042 |
|  |  |  |  |  | $ | 2,882 |  |  | $ | (1,039) |  |  | $ | 1,843 |
(1) Notional amounts are not in thousands. 15. 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 January 2, 2022:
|  |  |  |  |  | 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) |  |  |  |  |  |  |  |
| $ | 75,000 |  | April 30, 2023 | Pay fixed rate / receive floating rate | 2.85 | % | US LIBOR |  | $ | — |  |  | $ | (2,272) |
| 50,000 |  | April 30, 2024 | Pay fixed rate / receive floating rate | 1.51 | % | US LIBOR |  | 32 |  |  | (744) |
| 25,000 |  | April 30, 2025 | Pay fixed rate / receive floating rate | 1.06 | % | US LIBOR |  | 167 |  |  | (154) |
| 50,000 |  | April 30, 2025 | Pay fixed rate / receive floating rate | 0.78 | % | US LIBOR |  | 624 |  |  | — |
| 25,000 |  | June 30, 2026 | Pay fixed rate / receive floating rate | 1.59 | % | US LIBOR |  | — |  |  | (22) |
| 25,000 |  | June 30, 2026 | Pay fixed rate / receive floating rate | 1.23 | % | US LIBOR |  | 171 |  |  | — |
Unsecured Notes |  |  |  |  |  |  |  |
| 50,000 |  | August 25, 2023 | Pay fixed rate / receive floating rate | 1.18 | % | US LIBOR |  | — |  |  | (380) |
| 50,000 |  | August 25, 2026 | Pay fixed rate / receive floating rate | 1.34 | % | US LIBOR |  | 328 |  |  | (454) |
|  |  |  |  |  |  | $ | 1,322 |  |  | $ | (4,026) |
(1) The notional amounts for the interest rate swap contracts maturing in 2025 and 2026 are extensions to the $100 million interest rate swap contracts originally entered into related to the $300 million term loan. 15. 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 January 3, 2021:
|  |  |  |  |  | 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 |  | $ | — |  |  | $ | (630) |
| 25,000 |  | April 6, 2022 | Pay fixed rate / receive floating rate | 0.27 | % | US LIBOR |  | — |  |  | (48) |
| 75,000 |  | April 30, 2023 | Pay fixed rate / receive floating rate | 2.85 | % | US LIBOR |  | — |  |  | (3,800) |
| 50,000 |  | April 30, 2024 | Pay fixed rate / receive floating rate | 1.51 | % | US LIBOR |  | — |  |  | (1,886) |
| 25,000 |  | April 30, 2025 | Pay fixed rate / receive floating rate | 1.06 | % | US LIBOR |  | — |  |  | (755) |
| 25,000 |  | May 30, 2025 | Pay fixed rate / receive floating rate | 0.47 | % | US LIBOR |  | — |  |  | (30) |
Unsecured Notes |  |  |  |  |  |  |  |
| 50,000 |  | August 25, 2023 | Pay fixed rate / receive floating rate | 1.18 | % | US LIBOR |  | — |  |  | (1,330) |
| 50,000 |  | August 25, 2026 | Pay fixed rate / receive floating rate | 1.34 | % | US LIBOR |  | — |  |  | (2,465) |
|  |  |  |  |  |  | $ | — |  |  | $ | (10,944) |
(1) The notional amounts for the interest rate swap contracts maturing in 2023, 2024, and 2025 were extensions to the $150 million interest rate swap contracts originally entered into related to the $300 million term loan. The following table summarizes the Company’s hedged items as at January 2, 2022:
|  |  |  |  |  | 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 |  | $ | — |  |  | $ | — |  |  | $ | 2,554 |  |  | $ | (2,554) |
| Forecast expenses |  | — |  |  | — |  |  | 4 |  |  | (4) |
Commodity risk: |  |  |  |  |  |  |  |
| Forecast purchases |  | — |  |  | — |  |  | 64,813 |  |  | (64,813) |
Interest rate risk: |  |  |  |  |  |  |  |
| Forecast interest payments |  | — |  |  | — |  |  | (2,562) |  |  | 2,562 |
|  |  | $ | — |  |  | $ | — |  |  | $ | 64,809 |  |  | $ | (64,809) |
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. 15. FINANCIAL INSTRUMENTS (continued): (b)Derivative financial instruments - hedge accounting (continued): The following table summarizes the Company’s hedged items as at January 3, 2021:
|  |  |  |  |  | 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 |  | $ | — |  |  | $ | — |  |  | $ | (4,104) |  |  | $ | 4,104 |
| Forecast expenses |  | — |  |  | — |  |  | 1,626 |  |  | (1,626) |
Commodity risk: |  |  |  |  |  |  |  |
| Forecast purchases |  | — |  |  | — |  |  | 4,205 |  |  | (4,205) |
Interest rate risk: |  |  |  |  |  |  |  |
| Forecast interest payments |  | — |  |  | — |  |  | (10,765) |  |  | 10,765 |
|  |  | $ | — |  |  | $ | — |  |  | $ | (9,038) |  |  | $ | 9,038 |
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. (c) Financial expenses, net:
| 2021 |  | 2020
Interest expense on financial liabilities recorded at amortized cost (1) | $ | 14,923 |  |  | $ | 30,205 |
Bank and other financial charges (2) | 8,823 |  |  | 14,627 |
Interest accretion on discounted lease obligations | 2,650 |  |  | 3,227 |
Interest accretion on discounted provisions | 153 |  |  | 242 |
Foreign exchange loss | 782 |  |  | 229 |
| $ | 27,331 |  |  | $ | 48,530 |
(1) Net of capitalized borrowing costs of $1.6 million (2020 - $1.6 million). (2) Fiscal 2020 includes upfront costs of $3.9 million for the June 2020 amendments of the loans and notes agreements (note 12). 15. FINANCIAL INSTRUMENTS (continued): (d) Hedging components of other comprehensive income (“OCI”):
| 2021 |  | 2020
Net gain (loss) on derivatives designated as cash flow hedges: |  |  |
Foreign currency risk | $ | 3,599 |  |  | $ | 502 |
Commodity price risk | 83,130 |  |  | (12,699) |
Interest rate risk | 8,203 |  |  | (12,381) |
Income taxes | (36) |  |  | (5) |
Amounts reclassified from OCI to inventory, related to commodity price risk | (22,515) |  |  | 9,837 |
Amounts reclassified from OCI to net earnings, related to foreign currency risk, interest rate risk, and commodity risk, and included in: |  |  |
Net sales | 3,326 |  |  | (242) |
Cost of sales | — |  |  | 8,483 |
Selling, general and administrative expenses | (1,992) |  |  | 331 |
Financial expenses, net | 146 |  |  | (2,358) |
Income taxes | (14) |  |  | 29 |
Cash flow hedging gain (loss) | $ | 73,847 |  |  | $ | (8,503) |
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 January 2, 2022 and January 3, 2021. 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 January 2, 2022 and January 3, 2021. Approximately $64.1 million of net gains presented in accumulated other comprehensive income as at January 2, 2022 are expected to be reclassified to inventory or net earnings within the next twelve months. During fiscal 2020, the Company determined that it no longer met the criteria for hedge accounting for certain commodity forward, option, and swap contracts and certain forward foreign exchange contracts (collectively the "hedging instruments") as the commodity purchases and foreign currency sales which the hedging instruments were respectively hedging, were no longer expected to occur due to economic conditions resulting from the COVID-19 pandemic. Changes in the fair value of such commodity forward, option, and swap contracts and forward foreign exchange contracts resulted in a net loss of $9.0 million, which were transferred out of accumulated other comprehensive income and recognized immediately in net earnings during the second quarter of fiscal 2020.

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