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Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
We hold interest rate swap agreements that mitigate the risk of an increase in the borrowing rate on the Term Loan B. We enter into derivative contracts for risk management purposes only and do not utilize derivative instruments for trading or speculative purposes.
In June 2019, we entered into the June 2019 Swap Agreements with an aggregate notional amount of $300.0 million to mitigate the risk of an increase in the borrowing rate on the Term Loan B. The term of the June 2019 Swap Agreements began in June 2019 and expired in June 2023. Upon execution, we designated and documented the June 2019 Swap Agreements as cash flow hedges. The June 2019 Swap Agreements originally served as economic hedges and provided protection against rising interest rates.
In August 2019, we entered into the August 2019 Swap Agreements with an aggregate notional amount of $400.0 million to mitigate the risk of an increase in the borrowing rate on the Term Loan B. The term of the August 2019 Swap Agreements began in August 2019 and expires in August 2024. Upon execution, we designated and documented the August 2019 Swap Agreements as cash
flow hedges. The August 2019 Swap Agreements originally served as economic hedges and provided protection against rising interest rates.
In March 2020, we executed a strategy commonly known as a “blend and extend” on $100.0 million of the June 2019 Swap Agreements that extended the length of one of the June 2019 Swap Agreements through April 2026. We extended the existing pay-fixed swap rate over a longer period than its original term at a lower interest rate, while maintaining the same overall notional value of the swap. The remaining $200.0 million of the June 2019 Swap Agreements did not change.
On April 22, 2020, we repaid $315.0 million of the Term Loan B. In conjunction, the June 2019 Swap Agreements and the Modified June 2019 Swap Agreement were de-designated, since the hedged interest payments were no longer probable of occurring due to the repayment of the debt. As a result, $14.9 million was reclassified from accumulated other comprehensive loss to interest expense in the consolidated statement of operations. Consistent with company policy, we hold and issue derivative instruments for risk management purposes only and do not utilize derivative instruments for trading or speculative purposes. Accordingly, in April 2020 we entered into $300.0 million of notional amount counter-agreements (the “April 2020 Counter-agreements”) designed to economically offset the impact of the de-designated swap agreements with expiration dates in June 2023 and April 2026.
On March 24, 2022, we terminated the August 2019 Swap Agreements for net cash proceeds of $7.4 million. The swap agreements were used as economic hedges against rising interest rates and had been designated as cash flow hedges prior to termination. We recorded the settlement in accumulated other comprehensive income in the amount of $7.7 million which will be amortized through September 2024 aligned with the maturity of the Term Loan B.
By utilizing a derivative instrument to hedge our exposure to borrowing rate changes, we are exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, hedging instruments are placed with counterparties that we believe pose minimal credit risk. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices or currency exchange rates. We manage the market risk associated with derivative instruments by establishing and monitoring parameters that limit the types and degree of market risk that we may undertake.
We record derivative instruments at fair value on our consolidated balance sheets. When in qualifying relationships, the gains and losses on cash flow designated derivatives are deferred in accumulated other comprehensive loss (“AOCL”) and are reclassified to interest expense when the forecasted transaction takes place. The gains and losses of derivatives that are not designated as hedging instruments are recorded directly to interest expense, net in our consolidated statements of operations. Derivative assets and derivative liabilities that have maturity dates equal to or less than twelve months from the balance sheet date are included in prepaid expenses and other current assets and other accrued liabilities, respectively in our consolidated balance sheet. Derivative assets and derivative liabilities that have maturity dates greater than twelve months from the balance sheet date are included in other assets, net and other long-term liabilities, respectively in our consolidated balance sheets.
Derivative assets recorded at fair value in our consolidated balance sheets as of December 31, 2023 and January 1, 2023, respectively, consisted of the following:
Derivative Assets
(Amounts in thousands)December 31, 2023January 1, 2023
Derivatives Not Designated as Hedging Instruments
Interest rate swap agreements - other current assets3,156 6,135 
Interest rate swap agreements - other non-current assets2,262 4,446 
$5,418 $10,581 
Derivative liabilities recorded at fair value in our consolidated balance sheets as of December 31, 2023 and January 1, 2023, respectively, consisted of the following:
Derivative Liabilities
(Amounts in thousands)December 31, 2023January 1, 2023
Derivatives Not Designated as Hedging Instruments
Interest rate swap agreements - other accrued liabilities4,047 8,476 
Interest rate swap agreements - other long-term liabilities3,302 6,224 
$7,349 $14,700 
Losses before taxes on derivatives not designated as a cash flow hedge of $0.3 million were presented in interest expense, net in the consolidated statement of operations for the year ended December 31, 2023.
Gains and losses before taxes on derivatives designated as hedging instruments were recognized in AOCL and reclassified from AOCL into interest expense, net for the years ended December 31, 2023, January 1, 2023 and January 2, 2022 were as follows:
Gain (Loss)
Recognized in AOCL		Gain (Loss) Reclassified from
AOCL into Operations
(Amounts in thousands)December 31, 2023January 1, 2023January 2, 2022December 31, 2023January 1, 2023January 2, 2022
Interest rate swap agreements$— $11,540 $6,299 $3,177 $1,218 $(5,535)
Total$— $11,540 $6,299 $3,177 $1,218 $(5,535)
As of December 31, 2023, we expect to reclassify net gains of $3.2 million, currently recorded in AOCL, into interest expense, net within the next twelve months.