Derivative Instruments

9 Months Ended

Sep. 26, 2015

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 foreign currencies, primarily the Canadian dollar.  To minimize the short-term impact of foreign currency fluctuations on the Company’s operating expenses, the Company purchases forward currency contracts.  The Company’s accounting policies for these instruments are based on whether the instruments are classified as designated or non-designated hedging instruments. The Company records all derivatives in the Condensed Consolidated Balance Sheets at fair value. The changes in the fair values of the effective portions of designated cash flow hedges are recorded in Accumulated other comprehensive income (loss) until the hedged item is recognized in earnings. Derivatives that are not designated as hedging instruments and the ineffective portion of cash flow hedges are adjusted to fair value through earnings. The Company de-designates its cash flow hedges when the forecasted hedged transactions are realized or it is probable the forecasted hedged transactions will not occur in the initially identified time period. At such time, the associated gains and losses deferred in Accumulated other comprehensive income (loss) are reclassified immediately into earnings and any subsequent changes in the fair value of such derivative instruments are immediately recorded in earnings. The fair value of our derivative instruments are included in prepaid expenses and other assets or accrued liabilities.

The Company did not recognize any net gains or losses related to the de-designation of discontinued cash flow hedges during the nine months ended September 26, 2015.  As at September 26, 2015 the Company had 79 forward currency contracts outstanding (September 27, 2014 - 84), all with maturities of less than 15 months, which qualified and were designated as cash flow hedges.  As of September 26, 2015, the U.S. dollar notional amount of these contracts was$48.3 million (September 27, 2014 - $35.5million), and the contracts had an aggregate fair value loss of $2.7 million and $0.7 million for the three months ended September 26, 2015 and September 27, 2014, respectively (aggregate fair value loss of 0.7 million and $0.2 million for the nine months ended September 26, 2015 and September 27, 2014, respectively).  These were recorded in Accumulated other comprehensive loss, net of taxes.