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DERIVATIVE FINANCIAL INSTRUMENTS
 9 Months Ended
Oct. 03, 2025
DERIVATIVE FINANCIAL INSTRUMENTS  
DERIVATIVE FINANCIAL INSTRUMENTS

5. DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses certain interest rate derivative contracts to hedge interest rate exposures on its variable rate debt. The Company’s hedging program is not designated for trading or speculative purposes.

The Company recognizes derivative instruments as either assets or liabilities on the accompanying condensed consolidated balance sheets at fair value. The Company records changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as cash flow hedges in its consolidated balance sheets as accumulated other comprehensive income (loss), and in its consolidated statements of comprehensive income (loss) as a loss or gain on cash flow hedge valuation. All related cash flows are reported in the operating activities section of the consolidated statements of cash flows.

On November 30, 2023, the Company entered into an interest rate swap agreement that the Company designated as cash flow hedge to fix the variable interest rate on a portion of the Company’s Term Loan (see Note 6, “Debt Obligations” for information regarding our indebtedness). The interest rate swap agreement has a total notional amount of $50.0 million, has a fixed annual interest rate of 4.77%, and expires on September 29, 2026. As of October 3, 2025, the effective portion of the Company’s interest rate swap agreement designated as a cash flow hedge before tax effects was $(0.3) million, of which no amounts were reclassified from accumulated other comprehensive income (loss) to interest expense in the nine months ended October 3, 2025. The Company expects to reclassify $0.4 million from accumulated other comprehensive income (loss) to interest expense within the next twelve months.

The fair values of the Company’s outstanding derivatives designated as hedging instruments were as follows:

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Fair Value of Derivative

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Instruments as of

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Balance Sheet Location

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October 3, 2025

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December 27, 2024

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(in thousands)

Interest rate swap agreement

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Accrued liabilities

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$

(419)

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$

(198)

Interest rate swap agreement

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Other noncurrent liabilities

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—

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(200)

 

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The impact of the effective portions of derivative instruments in cash flow hedging relationships and fair value relationships on other comprehensive income (loss) was immaterial to the Company’s condensed consolidated financial statements for the three and nine months ended October 3, 2025.

The accumulated balances and reporting period activities for the periods below related to reclassifications out of accumulated other comprehensive income (loss) are summarized as follows:

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Gain (Loss) on

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Accumulated Other

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Derivative Instruments

    

Comprehensive Income (Loss)

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(in thousands)

Balances at December 27, 2024

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$

(314)

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$

(314)

Other comprehensive income (loss) before reclassifications

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(234)

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(234)

Amounts reclassified from accumulated other comprehensive income (loss)

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​

—

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—

Income tax benefit (expense) related to derivative instruments

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49

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49

Net current-period other comprehensive income (loss)

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​

(185)

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(185)

Balances at April 4, 2025

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$

(499)

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$

(499)

Other comprehensive income (loss) before reclassifications

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238

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238

Amounts reclassified from accumulated other comprehensive income (loss)

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​

—

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—

Income tax benefit (expense) related to derivative instruments

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(50)

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(50)

Net current-period other comprehensive income (loss)

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188

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188

Balances at July 4, 2025

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$

(311)

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$

(311)

Other comprehensive income (loss) before reclassifications

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​

(26)

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(26)

Amounts reclassified from accumulated other comprehensive income (loss)

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—

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—

Income tax benefit (expense) related to derivative instruments

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6

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6

Net current-period other comprehensive income (loss)

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(20)

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(20)

Balances at October 3, 2025

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$

(331)

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$

(331)

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