Foreign Currency Contracts

3 Months Ended

Mar. 30, 2018

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Foreign Currency Contracts

6. Foreign Currency Contracts

The Company addresses market risks from changes in foreign currency exchange rates through a risk management program that includes the use of derivative financial instruments to mitigate certain foreign currency transaction exposures from future settlement of non-functional currency monetary assets and liabilities as of the end of a period. The Company does not enter into derivative transactions for speculative purposes. Gains and losses on derivative financial instruments substantially offset losses and gains on the underlying hedged exposures. Furthermore, the Company manages its exposure to counterparty risks on derivative instruments by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

Beginning in September 2017, the Company commenced a foreign currency hedging program through the use of forward contracts as a part of its strategy to limit its exposures related to monetary assets and liabilities denominated in currencies other than the functional currency of the Company and its subsidiaries. These forward contracts are not designated as cash flow, fair value or net investment hedges. All changes in the fair value of these forward contracts are recognized in income before income taxes.

As of March 30, 2018, the aggregate notional amount of the Company’s foreign currency forward contracts was $27.5 million and the related fair value was a net loss of $0.2 million.

For the three months ended March 30, 2018, the Company recognized an aggregate net gain of $0.7 million, which is included in foreign exchange transaction gains (losses) in the consolidated statement of operations.