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Derivative Instruments and Hedging

3 Months Ended

Mar. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

12.	Derivative Instruments and Hedging

As of March 30, 2019 and December 29, 2018, the Company had in effect an interest rate swap with a notional amount totaling $1,250,000.

On July 26, 2013, in order to hedge a portion of its variable rate debt, the Company entered into a forward-starting interest rate swap with an effective date of March 31, 2014 and a termination date of April 2, 2020. The initial notional amount of this swap was $1,500,000. During the term of this swap, the notional amount decreased from $1,500,000 effective March 31, 2014 to $1,250,000 on April 3, 2017, and will decrease to $1,000,000 on April 1, 2019. This interest rate swap effectively fixes the variable interest rate on the notional amount of this swap at 2.41%. This swap qualifies for hedge accounting and, therefore, changes in the fair value of this swap have been recorded in accumulated other comprehensive loss.

On June 11, 2018, in order to hedge a portion of its variable rate debt, the Company entered into a forward-starting interest rate swap (hereinafter referred to as “future swap”) with an effective date of April 2, 2020 and a termination date of March 31, 2024. The initial notional amount of this swap is $500,000. During the term of this swap, the notional amount will decrease from $500,000 effective April 2, 2020 to $250,000 on March 31, 2021. This interest rate swap effectively fixes the variable interest rate on the notional amount of this swap at 3.1005%. This swap qualifies for hedge accounting and, therefore, changes in the fair value of this swap have been recorded in accumulated other comprehensive loss.

As of March 30, 2019 and December 29, 2018, cumulative unrealized losses for qualifying hedges were reported as a component of accumulated other comprehensive loss in the amounts of $6,669 ($8,995 before taxes) and $1,175 ($1,634 before taxes), respectively. As of March 30, 2019, the fair value of the Company’s currently effective swap was a current asset of $2,229, which is included in other current assets in the consolidated balance sheet. As of March 30, 2019, the fair value of the Company’s future swap was a liability of $9,961, which is included in derivative payable in the consolidated balance sheet. As of December 29, 2018, the fair value of the Company’s currently effective swap included a current asset of $3,526 and a noncurrent asset of $398, which are included in other current assets and other noncurrent assets, respectively, in the consolidated balance sheet. As of December 29, 2018, the fair value of the Company’s future swap was a liability of $5,578, which is included in derivative payable in the consolidated balance sheet.

The Company is hedging forecasted transactions for periods not exceeding the next five years. The Company expects approximately $690 ($925 before taxes) of derivative gains included in accumulated other comprehensive loss at March 30, 2019, based on current market rates, will be reclassified into earnings within the next 12 months.