Derivative instruments and hedging transactions

12 Months Ended

Dec. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative instruments and hedging transactions

Derivative instruments and hedging transactions

The Company’s hedging instruments have historically consisted solely of interest rate swaps to hedge the Company’s variable-rate term loans. In September 2012, the Company entered into variable-to-fixed interest rate swap agreements to hedge the risk of increases in cash flows (interest payments) attributable to increases in three-month LIBOR above the designated benchmark interest rate being hedged, through November 2017. As a result of an amendment in February 2014 to the senior credit facility, the Company amended the interest rate swap agreements to align the embedded floors with the amended term loans. As of the date of the amendment, a pre-tax gain of $5.8 million was recorded in accumulated other comprehensive loss.

Effective December 23, 2014, the Company terminated all interest rate swap agreements with its counterparties in anticipation of the 2015 securitization transaction and related repayment of the outstanding term loans. In fiscal years 2014 and 2015, the Company received total cash proceeds equivalent to fair value of the interest rate swaps at the termination date of $5.3 million, which was net of accrued interest owed to the counterparties of $1.0 million. Upon termination, cash flow hedge accounting was discontinued and the cumulative pre-tax gain of $1.8 million was recorded in accumulated other comprehensive loss.

As of December 27, 2014, a pre-tax gain of $6.2 million was recorded in accumulated other comprehensive loss, which included the gain related to both the February 2014 amendment and December 2014 termination. This pre-tax gain was amortized on a straight-line basis to interest expense in the consolidated statements of operations through November 23, 2017, the original maturity date of the swaps.

The table below summarizes the effects of derivative instruments in the consolidated statements of operations and comprehensive income for fiscal year 2017:

Derivatives designated as cash flow hedging instruments	Amount of net gain (loss) reclassified into earnings			Consolidated statement of operations classification	Total effect on other comprehensive income (loss)
Interest rate swaps	$	1,922		Interest expense	(1,922	)
Income tax effect	(778		)	Provision (benefit) for income taxes	778
Net of income taxes	$	1,144			(1,144	)

The table below summarizes the effects of derivative instruments in the consolidated statements of operations and comprehensive income for fiscal year 2016:

Derivatives designated as cash flow hedging instruments	Amount of net gain (loss) reclassified into earnings			Consolidated statement of operations classification	Total effect on other comprehensive income (loss)
Interest rate swaps	$	2,181		Interest expense	(2,181	)
Income tax effect	(882		)	Provision (benefit) for income taxes	882
Net of income taxes	$	1,299			(1,299	)

The table below summarizes the effects of derivative instruments in the consolidated statements of operations and comprehensive income for fiscal year 2015:

Derivatives designated as cash flow hedging instruments	Amount of net gain (loss) reclassified into earnings			Consolidated statement of operations classification	Total effect on other comprehensive income (loss)
Interest rate swaps	$	2,140		Interest expense	(2,140	)
Income tax effect	(867		)	Provision (benefit) for income taxes	867
Net of income taxes	$	1,273			(1,273	)