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Derivative Instruments and Hedging

3 Months Ended

Mar. 28, 2020

Derivative Instruments And Hedging Activities Disclosure [Abstract]

12.	Derivative Instruments and Hedging

As of March 28, 2020 and December 28, 2019, the Company had in effect an interest rate swap with a notional amount totaling $1,000,000.

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 to $1,000,000 on April 1, 2019. This interest rate swap effectively fixed 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 (the “2018 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 fixed the variable interest rate on the notional amount of this swap at 3.1005%. On June 7, 2019, in order to hedge a portion of its variable rate debt, the Company entered into a forward-starting interest rate swap (together with the 2018 swap, the “future swaps”) with an effective date of April 2, 2020 and a termination date of March 31, 2024. The notional amount of this swap is $250,000. This interest rate swap effectively fixed the variable interest rate on the notional amount of this swap at 1.901%. The future swaps qualify for hedge accounting and, therefore, changes in the fair value of the future swaps have been recorded in accumulated other comprehensive loss.

As of March 28, 2020 and December 28, 2019, cumulative unrealized losses for qualifying hedges were reported as a component of accumulated other comprehensive loss in the amounts of $25,180 ($33,812 before taxes) and $15,529 ($20,856 before taxes), respectively. As of March 28, 2020, the fair value of the Company’s then-effective swap was a liability of $1,138, which is included in derivative payable in the consolidated balance sheet. As of March 28, 2020, the fair value of the Company’s future swaps was a liability of $33,765, which is included in derivative payable in the consolidated balance sheet. As of December 28, 2019, the fair value of the Company’s then-effective swap was a liability of $1,881, which is included in derivative payable in the consolidated balance sheet. As of December 28, 2019, the fair value of the Company’s future swaps was a liability of $19,716, 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 $10,513 ($14,093 before taxes) of derivative losses included in accumulated other comprehensive loss at March 28, 2020, based on current market rates, will be reclassified into earnings within the next 12 months.