5. Derivative Financial Instruments

The Company uses derivative financial instruments to manage certain exposures to the variability of interest rates and foreign currency exchange rates. The Company's objective is to offset increases and decreases in expenses resulting from these exposures with gains and losses on the derivative contracts, thereby reducing volatility of earnings.

Interest Rate Swaps

The Company is exposed to interest rate fluctuations in the normal course of its business, including through its Credit Facility. The interest payments on the facility are calculated using a variable-rate of interest. The Company entered into an interest rate swap agreement with an original notional value of $72.5 million in July 2016 and, effectively, converted the Eurodollar portion of the variable-rate interest payments to fixed-rate interest payments through July 2020. The Company terminated the swap agreement on March 6, 2017 in connection with the payoff of its Credit Facility. The Company's previous swap agreement with a remaining notional value of $72.5 million was terminated on July 8, 2016.

The Company's interest rate swap agreements were designated and qualified as cash flow hedges. The effective portion of the gain or loss on the interest rate swaps was recorded in accumulated other comprehensive income (loss) as a separate component of stockholders' equity and was subsequently recognized as interest expense in the Consolidated Statement of Income when the hedged exposure affected earnings. The termination of the swap agreement on March 6, 2017 resulted in the reclassification of $1.8 million of unrealized gains that were previously recorded in accumulated other comprehensive income (loss) into earnings during fiscal 2017. The fair value of the interest rate swap terminated on July 8, 2016 was not material. The Company did not discontinue any other cash flow hedges in any of the periods presented.

The Company's derivative financial instrument in cash flow hedging relationships consisted of the following (in thousands):

		Fair Value

	Balance Sheet Location	December 30, 2017		December 31, 2016
Interest rate swap	Other assets, net	$	—	$	1,808

The before-tax effect of derivative instruments in cash flow hedging relationships was as follows (in thousands):

	Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) during the Year Ended							Location of Loss Reclassified into Income	Loss Reclassified from Accumulated OCI into Income (Effective Portion) during the Year Ended

	December 30, 2017		December 31, 2016		January 2, 2016				December 30, 2017		December 31, 2016			January 2, 2016
Interest rate swaps	$	—	$	1,466	$	(728	)	Interest expense	$	1,808	$	(249	)	$	(489	)

Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts to manage exposure to foreign exchange risk. As of December 30, 2017 and December 31, 2016, the Company held one foreign currency forward contract denominated in Norwegian Krone with a notional value of $2.4 million and $3.9 million, respectively. The fair value of the contracts was not material as of December 30, 2017 or December 31, 2016. The contract held as of December 30, 2017 has a maturity date of March 28, 2018 and it was not designated as a hedging instrument.

The before-tax effect of derivative instruments not designated as hedging instruments was as follows (in thousands):

	Year Ended

Gain (Loss) Recognized in Income	December 30, 2017			December 31, 2016			January 2, 2016		Location
Foreign currency forward contracts	$	(207	)	$	(92	)	$	935	Interest income and other, net