DERIVATIVES
The Company's earnings, cash flows and financial position are exposed to market risks relating to interest rates. It is the Company's policy to minimize its exposure to adverse changes in interest rates and manage interest rate risks inherent in funding the Company with debt. The Company addresses this risk by maintaining a mix of fixed and floating rate debt and entering into interest rate swaps for a portion of its variable rate debt to minimize interest rate volatility.
The following is a summary of the Company's interest rate swaps outstanding as of June 30, 2018: | | | | | | | | | Type | Notional Amount | | Effective Date | Fixed Rate | Variable Rate | Interest rate swap | $ | 25,000 |
| | September 1, 2016 through September 1, 2021 | 3.105% | 1 Month LIBOR | Interest rate swap | $ | 25,000 |
| | September 1, 2015 through September 1, 2021 | 3.304% | 1 Month LIBOR | Interest rate swap | $ | 6,838 |
| (1) | November 7, 2014 through November 7, 2024 | 4.500% | 1 Month LIBOR | Interest rate swap | $ | 5,215 |
| (2) | January 7, 2017 through January 7, 2025 | 4.300% | 1 Month LIBOR |
(1) Interest rate swap notional amount amortizes by $35 monthly to maturity. (2) Interest rate swap notional amount amortizes by $26 monthly to maturity.
The following table summarizes the fair values of derivative instruments included in the Company's financial statements: | | | | | | | | | | | | Location on Consolidated Balance Sheets | | Fair Value | | | June 30,
2018 | | December 30,
2017 | Asset Derivatives: | | | | | | Derivatives designated as hedging instruments: | | | | | | Interest rate swaps, current portion | Prepaids and other current assets | | $ | 2 |
| | — |
| Interest rate swaps, long-term portion | Other Assets | | 194 |
| | $ | — |
| Total Asset Derivatives | | | $ | 196 |
| | $ | — |
| | | | | | | Liability Derivatives: | | | | | | Derivatives designated as hedging instruments: | | | | | | Interest rate swaps, current portion | Accrued Expenses | | $ | 449 |
| | $ | 842 |
| Interest rate swaps, long-term portion | Other Long-Term Liabilities | | 412 |
| | 1,387 |
| Total Liability Derivatives | | | $ | 861 |
| | $ | 2,229 |
|
The following tables summarize the pre-tax impact of derivative instruments on the Company's financial statements: | | | | | | | | | | | | | | | | | | Amount of Gain or (Loss) Recognized in AOCIL on the effective portion of the Derivative | | Three Months Ended | | Six Months Ended | | June 30,
2018 | | July 1,
2017 | | June 30,
2018 | | July 1,
2017 | Derivatives designated as hedging instruments: | | | | | | | | Cash flow hedges - interest rate swaps | $ | 323 |
| | $ | (359 | ) | | $ | 1,128 |
| | $ | (303 | ) | | | | | | | | | | Amount of Gain or (Loss) Reclassified from AOCIL on the effective portion into Income (1)(2) | | Three Months Ended | | Six Months Ended | | June 30,
2018 | | July 1,
2017 | | June 30,
2018 | | July 1,
2017 | Derivatives designated as hedging instruments: | | | | | | | | Cash flow hedges - interest rate swaps | $ | (177 | ) | | $ | (324 | ) | | $ | (406 | ) | | $ | (683 | ) |
| | (1) | The amount of gain (loss) reclassified from AOCIL is included in interest expense on the Company's financial statements. |
| | (2) | The amount of loss expected to be reclassified from AOCIL into earnings during the next 12 months subsequent to June 30, 2018 is $447. |
The amount of gain (loss) recognized in income on the ineffective portion of interest rate swaps, if any, is included in other expense, net on the Company's Consolidated Condensed Statements of Operations. There was no ineffective portion for the periods presented. |