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Financial Instruments | 9 Months Ended
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Sep. 28, 2020
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Financial Instruments | (10) Financial Instruments Derivatives Interest Rate Swaps The Company’s business is exposed to interest rate risk resulting from fluctuations in interest rates on certain LIBOR-based variable rate debt. Increases in interest rates would increase interest expenses relating to the outstanding variable rate borrowings and increase the cost of debt. Fluctuations in interest rates can also lead to significant fluctuations in the fair value of the debt obligations. On May 15, 2018, the Company entered into a four-year pay-fixed, receive floating (1-month LIBOR), interest rate swap arrangement with a notional amount of $400,000 for the period beginning June 1, 2018 and ending on June 1, 2022. Under the terms of the interest rate swap, the Company pays a fixed rate of 2.84% against the first interest payments of a portion of its LIBOR-based debt and receives floating 1-month LIBOR during the swap period. At inception, the Company designated the interest rate swap as a cash flow hedge and the fair value of the interest rate swap was zero. As of September 28, 2020, the fair value of the interest rate swap was recorded as a liability in the amount of $17,461 and included as a component of other long-term liabilities. The change in the fair value of the interest rate swap is recorded as a component of accumulated other comprehensive loss, net of tax. No ineffectiveness was recognized for the quarter and three quarters ended September 28, 2020 and September 30, 2019. The interest rate swap increased interest expense by $2,707 and $602 for the quarters ended September 28, 2020 and September 30, 2019, respectively, and $6,224 and $1,308 for the three quarters ended September 28, 2020 and September 30, 2019, respectively. Foreign Exchange Contracts The Company enters into foreign currency forward contracts to mitigate the impact of changes in foreign currency exchange rates and to reduce the volatility of purchases and other obligations generated in currencies other than its functional currencies. The Company’s foreign subsidiaries may at times purchase forward exchange contracts to manage their foreign currency risks in relation to certain purchases of machinery denominated in foreign currencies other than the Company’s functional currencies. The notional amount of the foreign exchange contracts as of September 28, 2020 and December 30, 2019 was approximately $1,968 (Japanese Yen (JPY) 209.0 million) and $1,994 (JPY 215.8 million), respectively. The Company has designated certain of these foreign exchange contracts as cash flow hedges. The fair values of derivative instruments in the consolidated condensed balance sheets are as follows:
|  |  |  | Asset/(Liability) Fair Value |
|  | Balance Sheet Location |  | September 28, 2020 |  |  | December 30, 2019 |
|  |  |  | (In thousands) |
Cash flow derivative instruments designated as hedges: |  |  |  |  |  |  |  |
Interest rate swap |  | Other long-term liabilities |  | $ | (17,461 | ) |  | $ | (12,067 | )
Cash flow derivative instruments not designated as hedges: |  |  |  |  |  |  |  |
Foreign exchange contracts |  | Prepaid expenses and other current assets |  |  | 19 |  |  |  | 1 |
Foreign exchange contracts |  | Other current liabilities |  |  | — |  |  |  | (3 | )
The following table provides information about the amounts recorded in accumulated other comprehensive loss related to derivatives designated as cash flow hedges, as well as the amounts recorded in each caption in the consolidated condensed statements of operations when derivative amounts are reclassified out of accumulated other comprehensive loss for the quarter and three quarters ended September 28, 2020 and September 30, 2019:
|  |  | Quarter Ended September 28, 2020 |  |  | Quarter Ended September 30, 2019 |  |
|  | Financial Statement Caption | Loss Recognized in Other Comprehensive Loss |  |  | Loss Reclassified into Income |  |  | Loss Recognized in Other Comprehensive Loss |  |  | Loss Reclassified into Income |  |
|  |  | (In thousands)
Cash flow hedge: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap |  | Interest expense | $ | (586 | ) |  | $ | (2,707 | ) |  | $ | (1,923 | ) |  | $ | (602 | ) |
|  |  | Three Quarters Ended September 28, 2020 |  |  | Three Quarters Ended September 30, 2019 |  |
|  | Financial Statement Caption | Loss Recognized in Other Comprehensive Loss |  |  | Loss Reclassified into Income |  |  | Loss Recognized in Other Comprehensive Loss |  |  | Loss Reclassified into Income |  |
|  |  | (In thousands)
Cash flow hedge: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap |  | Interest expense | $ | (11,618 | ) |  | $ | (6,224 | ) |  | $ | (10,586 | ) |  | $ | (1,308 | ) |
The following table provides a summary of the activity associated with the designated cash flow hedges reflected in accumulated other comprehensive loss for the three quarters ended September 30, 2020 and September 30, 2019:
|  | Three Quarters Ended
|  | September 28, |  |  | September 30, |  |
|  | 2020 |  |  | 2019 |  |
|  | (In thousands)
Beginning balance, net of tax |  | $ | (9,617 | ) |  | $ | (4,214 | ) |
Changes in fair value loss, net of tax |  |  | (8,667 | ) |  |  | (8,164 | ) |
Reclassification to earnings, net of tax |  |  | 4,727 |  |  |  | 1,128 |  |
Derecognition of unrealized losses on cash flow hedge due to sale of Mobility business unit |  |  | 384 |  |  |  | — |  |
Ending balance, net of tax |  | $ | (13,173 | ) |  | $ | (11,250 | ) |
Based on the current yield curve, the Company expects that losses of approximately $7,961 of the accumulated other comprehensive loss will be reclassified into the statement of operations, net of tax, in the next twelve months.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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