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Derivative Financial Instruments | 6 Months Ended
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Jun. 29, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments As a result of its operating and financing activities, the Company is exposed to market risks from changes in foreign currency exchange rates and interest rates. These market risks may adversely affect the Company’s operating results, cash flows and financial position. The Company seeks to manage the risk from changes in foreign currency exchange rates through the use of forward contracts or cross currency swaps or both, and from time to time, may also use interest rate swaps to manage the risk of changes in interest rates. The Company’s forward contracts are not collateralized and are entered into with large, reputable financial institutions that are monitored for counterparty risk. Refer to Note 5 for information on the fair value of our derivative financial instruments. Foreign currency contracts The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations. The Company uses forward contracts to manage its exposure to fluctuations in the U.S. Dollar (“USD”) – Canadian Dollar (“CAD”) and may also use cross currency swaps for the same reason. Forward contracts lock in the exchange rate for a portion of the estimated cash flows of the Company’s Canadian operations. As of June 29, 2024 and December 30, 2023, the Company’s forward contracts had USD equivalent gross notional amounts of $146.3 million and $33.2 million, respectively. In April 2024, the Company terminated its cross currency swaps, resulting in net proceeds of $28.1 million. These cross currency swaps were not designated in hedging relationships. Cross currency swaps with notional amounts of $275.0 million were outstanding as of December 30, 2023. Interest rate swap contracts The Company’s market risk is affected by changes in interest rates. The Company’s Senior Secured Credit Facilities bear interest based on market rates plus an applicable margin. Because the interest rate on the Company’s floating-rate debt is tied to market rates, the Company may from time to time manage its exposure to interest rate movements by effectively converting a portion of its floating-rate debt to fixed-rate debt using interest rate swaps. Interest rate swaps involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount. The Company previously entered into two interest rate swaps that were designated as cash flow hedges. In April 2024, the Company terminated its interest rate swaps, resulting in net proceeds of $10.3 million. All amounts deferred into other comprehensive income prior to termination will be amortized to interest expense through May 2025, being the original maturity date of the interest rate swaps. Interest rate swaps with notional amounts of $275.0 million were outstanding at December 30, 2023. The fair values of cross currency swap contracts, forward contracts and interest rate swap contracts were as follows:
(in thousands) | Balance Sheet Location |  | June 29, 2024 |  | December 30, 2023
Derivatives not designated as hedging instruments: |  |  |  |  |
Forward contracts | Derivative asset – current |  | $ | 52 |  |  | $ | — |
Cross currency swaps | Derivative asset – non-current |  | — |  |  | 20,831 |
Total derivatives in an asset position |  |  | $ | 52 |  |  | $ | 20,831 |
Forward contracts | Accounts payable and accrued liabilities |  | $ | 26 |  |  | $ | 384 |
Cross currency swaps | Accounts payable and accrued liabilities |  | — |  |  | 466 |
Total derivatives in a liability position |  |  | $ | 26 |  |  | $ | 850 |
Derivatives designated as hedging instruments: |  |  |  |  |
Interest rate swaps | Derivative asset – current |  | $ | — |  |  | $ | 7,691 |
Interest rate swaps | Derivative asset – non-current |  | — |  |  | 2,688 |
Total derivatives in an asset position |  |  | $ | — |  |  | $ | 10,379 |
Total deferred gain | Accumulated other comprehensive income |  | $ | 9,705 |  |  | $ | 13,045 |
The impact of derivative financial instruments on the unaudited interim condensed consolidated statements of operations and comprehensive income was as follows:
| Thirteen Weeks Ended |  | Twenty-Six Weeks Ended |  |
(in thousands) | June 29, 2024 |  | July 1, 2023 |  | June 29, 2024 |  | July 1, 2023 |  |  |  |
Gain (loss) on forward contracts recognized in (loss) gain on foreign currency, net | $ | 189 |  |  | $ | (624) |  |  | $ | 460 |  |  | $ | (689) |  |  |  |  |
Gain (loss) on cross currency swaps recognized in (loss) gain on foreign currency, net | $ | 2,033 |  |  | $ | (4,619) |  |  | $ | 7,647 |  |  | $ | (3,930) |  |  |  |  |
Gain on interest rate swaps recognized in interest expense, net | $ | 2,680 |  |  | $ | 2,729 |  |  | $ | 5,704 |  |  | $ | 5,123 |  |  |  |  |
The table below presents the effect of cash flow hedge accounting on other comprehensive (loss) income, net of tax:
| Thirteen Weeks Ended |  | Twenty-Six Weeks Ended |  |
(in thousands) | June 29, 2024 |  | July 1, 2023 |  | June 29, 2024 |  | July 1, 2023 |  |  |  |
Gain recognized in other comprehensive (loss) income | $ | 165 |  |  | $ | 4,768 |  |  | $ | 2,364 |  |  | $ | 3,515 |  |  |  |  |
Gain reclassified from accumulated other comprehensive income into net income | $ | 2,680 |  |  | $ | 2,729 |  |  | $ | 5,704 |  |  | $ | 5,123 |  |  |  |  |
Amounts reclassified from accumulated other comprehensive income into net income are recognized in interest expense, net. Within the next 12 months, the Company estimates that an additional $9.7 million of gains currently recognized within accumulated other comprehensive income will be reclassified as a decrease in interest expense, net.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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