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Derivatives | 9 Months Ended
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Sep. 28, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Derivatives The Company uses derivative instruments primarily to reduce its exposure to changes in currency exchange rates and interest rates. The Company believes that any credit risk associated with its derivative instruments is remote based on the creditworthiness of the financial institutions issuing those agreements. The Company does not hold or engage in transactions involving derivative instruments for purposes other than risk management. Interest Rate Swap Agreements In 2018, the Company entered into an interest rate swap agreement (2018 Swap Agreement) with Citizens which has a $15,000,000 notional value and expires on June 30, 2023. In 2015, the Company also entered into an interest rate swap agreement (2015 Swap Agreement) with Citizens which has a $10,000,000 notional value and expires on March 27, 2020. The swap agreements hedge the Company’s exposure to movements in the three-month LIBOR rate on U.S. dollar-denominated debt. On a quarterly basis, the Company receives a three-month LIBOR rate and pays a fixed rate of interest of 3.15% plus an applicable margin as defined in the Credit Agreement on the 2018 Swap Agreement and 1.50% plus an applicable margin as defined in the Credit Agreement on the 2015 Swap Agreement. The 2018 Swap Agreement is subject to a zero percent floor on the three-month LIBOR rate. The interest rate swap agreements are designated as cash flow hedges and the Company has structured its interest rate swap agreements to be 100% effective. The fair values of the interest rate swap agreements represent the estimated amounts the Company would receive from or pay to the counterparty in the event of early termination. Unrealized gains and losses related to the fair values of the swap agreements are recorded to AOCI, net of tax. The counterparty to the interest rate swap agreements could demand an early termination of those agreements if the Company were to be in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and if the Company were to be unable to cure the default (See Note 5). Forward Currency-Exchange Contracts The Company uses forward currency-exchange contracts that typically have maturities of twelve months or less to hedge exposures resulting from fluctuations in currency exchange rates. Such exposures result from assets and liabilities that are denominated in currencies other than functional currencies. Forward currency-exchange contracts that hedge forecasted accounts receivable or accounts payable are designated as cash flow hedges and unrecognized gains and losses are recorded to AOCI, net of tax. Deferred gains and losses are recognized in the statement of income in the period in which the underlying transaction occurs. The fair values of forward currency-exchange contracts that are designated as fair value hedges and forward currency-exchange contracts that are not designated as hedges are recognized currently in earnings. The Company recognized within SG&A expenses in the accompanying condensed consolidated statement of income losses of $14,000 in the third quarter of 2019, losses of $67,000 in the third quarter of 2018, losses of $46,000 in the first nine months of 2019, and losses of $40,000 in the first nine months of 2018 associated with forward currency-exchange contracts that were not designated as hedges. The following table summarizes the fair value of the Company's derivative instruments in the accompanying condensed consolidated balance sheet:
|  |  |  | September 28, 2019 |  | December 29, 2018
|  | Balance Sheet Location |  | Asset (Liability) (a) |  | Notional Amount (b) |  | Asset (Liability) (a) |  | Notional Amount
(In thousands) |  |  |  |  |
Derivatives Designated as Hedging Instruments: |  |  |  |  |  |  |  |
Derivatives in an Asset Position: |  |  |  |  |  |  |  |  |  |
2015 Swap Agreement |  | Other Current Assets |  | $ | 26 |  |  | $ | 10,000 |  |  | $ | — |  |  | $ | — |
2015 Swap Agreement |  | Other Long-Term Assets |  | $ | — |  |  | $ | — |  |  | $ | 148 |  |  | $ | 10,000 |
Forward currency-exchange contract |  | Other Long-Term Assets |  | $ | — |  |  | $ | — |  |  | $ | 11 |  |  | $ | 842 |
Derivatives in a Liability Position: |  |  |  |  |  |  |  |  |  |
Forward currency-exchange contracts |  | Other Current Liabilities |  | $ | (89 | ) |  | $ | 1,976 |  |  | $ | (50 | ) |  | $ | 2,946 |
2018 Swap Agreement |  | Other Long-Term Liabilities |  | $ | (894 | ) |  | $ | 15,000 |  |  | $ | (352 | ) |  | $ | 15,000 |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |  |  |
Derivatives in an Asset Position: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward currency-exchange contracts |  | Other Current Assets |  | $ | — |  |  | $ | — |  |  | $ | 9 |  |  | $ | 1,192 |
Derivatives in a Liability Position: |  |  |  |  |  |  |  |  |  |
Forward currency-exchange contracts |  | Other Current Liabilities |  | $ | (32 | ) |  | $ | 1,277 |  |  | $ | (31 | ) |  | $ | 1,384 |
(a) See Note 11 for the fair value measurements relating to these financial instruments. (b) The total 2019 notional amounts are indicative of the level of the Company's recurring derivative activity. The following table summarizes the activity in AOCI associated with the Company's derivative instruments designated as cash flow hedges as of and for the nine months ended September 28, 2019:
(In thousands) |  | Interest Rate Swap Agreements |  | Forward Currency- Exchange Contracts |  | Total
Unrealized Loss, Net of Tax, at December 29, 2018 |  | $ | (170 | ) |  | $ | (27 | ) |  | $ | (197 | )
(Gain) loss reclassified to earnings (a) |  | (12 | ) |  | 89 |  |  | 77 |
Loss recognized in AOCI |  | (478 | ) |  | (123 | ) |  | (601 | )
Unrealized Loss, Net of Tax, at September 28, 2019 |  | $ | (660 | ) |  | $ | (61 | ) |  | $ | (721 | )
(a) See Note 9 for the income statement classification. As of September 28, 2019, the Company expects to reclassify losses of $195,000 from AOCI to earnings over the next twelve months based on the estimated cash flows of the interest rate swap agreements and the maturity dates of the forward currency-exchange contracts.

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- References No definition available. + Details
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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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