Derivative Instruments and Hedging Activities

Cash Flow Hedges of Interest Rate Risk - On September 9, 2014, the Company entered into variable-to-fixed interest rate swap agreements with eight counterparties to hedge a portion of the cash flows of the Company’s variable rate debt. The swap agreements have an aggregate notional amount of $400.0 million, a start date of June 30, 2015, and mature on May 16, 2019. Under the terms of the swap agreements, the Company pays a weighted-average fixed rate of 2.02% on the $400.0 million notional amount and receives payments from the counterparty based on the 30-day LIBOR rate. The interest rate swaps, which have been designated and qualify as a cash flow hedge, are recognized on the Company’s Consolidated Balance Sheets at fair value and are classified based on the instruments’ maturity dates.

The following table presents the fair value and classification of the Company’s interest rate swaps:



(dollars in thousands)	JULY 1, 2018		DECEMBER 31, 2017		CONSOLIDATED BALANCE SHEET CLASSIFICATION
Interest rate swaps - asset	$	1,162	$	—	Other current assets, net
Interest rate swaps - asset	—		67		Other assets, net
Total fair value of derivative instruments - assets (1)	$	1,162	$	67

Interest rate swaps - liability (1)	$	—	$	1,010	Accrued and other current liabilities

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(1)	See Note 11 - Fair Value Measurements for fair value discussion of the interest rate swaps.

The following table summarizes the effects of the interest rate swaps on Net income for the periods indicated:



	THIRTEEN WEEKS ENDED						TWENTY-SIX WEEKS ENDED
(dollars in thousands)	JULY 1, 2018			JUNE 25, 2017			JULY 1, 2018			JUNE 25, 2017
Interest rate swap expense recognized in Interest expense, net (1)	$	(95	)	$	(1,036	)	$	(510	)	$	(2,301	)
Income tax benefit recognized in Provision for income taxes	24			393			131			874
Total effects of the interest rate swaps on Net income	$	(71	)	$	(643	)	$	(379	)	$	(1,427	)

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(1)	During the thirteen and twenty-six weeks ended July 1, 2018 and June 25, 2017, the Company did not recognize any gain or loss as a result of hedge ineffectiveness.