Derivative Instruments and Hedging Activity

12 Months Ended

Dec. 28, 2013

Derivative Instruments and Hedging Activity

9. Derivative Instruments and Hedging Activity

Our Company accounts for all derivatives on the balance sheet as an asset or liability measured at fair value and changes in fair values are recognized in earnings unless specific hedge accounting criteria are met for cash flow or net investment hedges. If such hedge accounting criteria are met, the change is deferred in stockholder’s equity as a component of accumulated other comprehensive (loss) income. The deferred items are recognized in the period the derivative contract is settled. As of December 28, 2013, we had not designated any of our derivative instruments as hedges, and therefore, have recorded the changes in fair value in the Consolidated Statements of Comprehensive (Loss) Income.

Our Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, our Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value.

Our Company utilizes foreign currency exchange forward contracts to reduce our risk related to inventory purchases and foreign currency based accounts receivable. These contracts are not designated as hedges, and therefore, under current accounting standards are recorded at fair value at each balance sheet date, with the resulting change charged or credited to selling, general and administrative expenses in the accompanying Consolidated Statements of Comprehensive (Loss) Income.

No foreign currency exchange contracts were in place as of December 28, 2013.

The foreign currency exchange contracts in aggregated notional amounts in place to exchange United States Dollars at December 29, 2012 were as follows:

	December 29, 2012
	U.S. Dollars		ForeignCurrency
Foreign Currency Exchange Forward Contracts:
U.S. Dollars / Canadian Dollars	$	11,303	Cdn$	11,193
U.S. Dollars / Mexican Pesos	$	3,760	Mxn$	50,018

As of December 29, 2012, the fair value of the foreign currency exchange forward contracts, using Level 2 inputs from a third party bank, represented an asset of $147. Changes in the fair value of the foreign currency exchange forward contracts are reflected in selling, general and administrative expenses each period.

The assets and liabilities measured at fair value on a recurring basis at December 29, 2012, were as follows:

	Fair Value Measurements at Reporting Date Using
	QuotedPrices inActiveMarkets forIdenticalAssets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
Assets:
Foreign currency exchange forward contracts	$	—	$	147	$	—
Liabilities:
None	$	—	$	—	$	—