Derivative Instruments

12 Months Ended

Dec. 27, 2014

Derivative Instruments [Abstract]

Derivative Instruments

NOTE 3. DERIVATIVE INSTRUMENTS

The Company generates revenues in U.S. dollars but incurs a portion of its operating expenses in various foreign currencies, primarily the Canadian dollar. To minimize the short-term impact of foreign currency fluctuations on the Company’s operating expenses, the Company uses forward currency contracts.

Forward currency contracts that are used to hedge exposures to variability in forecasted foreign currency cash flows are designated as cash flow hedges. The maturities of these instruments are less than twelve months. For these derivatives, the gain or loss from the effective portion of the hedge is initially reported as a component of other comprehensive income in stockholders’ equity and subsequently reclassified to earnings in the same period in which the hedged transaction affects earnings. As the hedge transactions are incurred, the effective portion of the hedge is recognized into operating income. The gain or loss from the ineffective portion of the hedge is recognized as income or expense immediately.

At December 27, 2014, the Company had 150 foreign currency forward exchange contracts outstanding that qualified and were designated as cash flow hedges. At December 28, 2013, there were 27 such currency forward contracts outstanding. The U.S. dollar notional amount of these contracts was $40.9 million and $27.7 million at December 27, 2014 and December 28, 2013, respectively, and the contracts had a fair value of $1.5 million loss and a fair value of $0.6 million loss in December 27, 2014 and December 28, 2013, respectively. No portion of the hedging instrument’s gain or loss was excluded from the assessment of effectiveness. The ineffective portions of hedges had no significant impact on earnings, nor are they expected to over the next twelve months.