Financial Instruments

12 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

Financial Instruments

The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company's financial performance and are referred to as "market risks." The Company, when deemed appropriate, uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risk managed by the Company through the use of derivative instruments is foreign currency exchange rate risk. The Company does not enter into derivative contracts for trading purposes.

In 2012, the Company entered into forward contracts to buy or sell a quantity of a currency at a predetermined future date, and at a predetermined rate or price to mitigate uncertainty and volatility, and to cover underlying exposures to certain payments in currencies other than the functional currency. The Company has not designated these contracts for hedge accounting treatment and, therefore, the gains and losses on these contracts are recorded in other income (loss). In fiscal years 2012 and 2011, the Company recognized a loss of $(0.3) million and a gain of $0.6 million, respectively, related to these forward contracts.

At December 31, 2012 and December 30, 2011, derivatives totaling approximately $(0.2) million and $0.6 million are carried at fair value in the consolidated balance sheets in the line items accrued expenses and other assets, respectively. The Company has determined that the fair value of the foreign exchange contracts are level 2 measurements in the fair value hierarchy. To measure the fair value of the foreign exchange contracts, the Company obtained quotations from financial institutions. The total notional value of derivatives related to foreign exchange contracts of this type as of December 31, 2012 and December 30, 2011 totaled approximately $9.0 million and $9.7 million, respectively. As of December 31, 2010, the Company had no outstanding derivative financial instruments which required fair value measurements.

Historically, the Company has entered into interest rate agreements with major financial institutions to reduce the impact of interest rate fluctuations related to debt payments. In October 2005, the Company entered into four interest rate swaps (the Interest Rate Swaps), whereby the Company paid its counterparties a fixed interest rate of 4.623% on a notional amount of $375.0 million. In exchange, the Company received payments equal to a floating interest rate of three-month U.S. Dollar LIBOR on an equivalent notional amount. The Interest Rate Swaps were initially designated as cash flow hedges that effectively converted a portion of the Company's U.S. Dollar floating rate debt into fixed rate debt. The effectiveness of the Interest Rate Swaps was assessed using the hypothetical derivative method. The effective portion of the gains and losses on these instruments were report as a component of Other Comprehensive Income and reclassified into earnings in the same period which the hedged transaction affected earnings. Pretax losses on derivatives previously designated as cash flow hedging instruments reclassified from accumulated OCI to earnings totaled $4.3 million in 2010. As of December 31, 2010, all pretax losses recognized in OCI had been fully amortized into earnings. The Company had no outstanding interest rate swaps as of December 31, 2012 and December 30, 2011.

The following tables summarize the effect of the Company's derivative instruments on the Consolidated Statements of Operations for the years ended December 31, 2012, December 30, 2011, and December 31, 2010:

	Location of Loss Reclassified from Accumulated OCI into Earnings	Amount of Pretax Loss Reclassified from Accumulated OCI into Earnings
		Year Ended December 31, 2012		Year Ended December 30, 2011		Year Ended December 31, 2010
Derivatives designated as cash flow hedging instruments
Interest rate swap agreements	Interest expense	$	—	$	—	$	4,287

		Amount of Pretax Loss Recognized in Earnings
	Location of Loss	Year Ended December 31, 2012		Year Ended December 30, 2011			Year Ended December 31, 2010
Derivatives not designated as hedging instruments
Foreign exchange contracts	Other loss (income)	$	289	$	(613	)	$	—

The fair value of our long-term debt is estimated using Level 2 inputs based on dealer quoted prices for our debt instruments based on recent transactions obtained from various sources. As of December 31, 2012, the carrying amount and fair value of our Senior Secured Notes were $375.0 million and $348.8 million, respectively. As of December 30, 2011, the carrying amount and fair value of our Senior Secured Notes were $375.0 million and $294.4 million, respectively.

The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. The fair value of these financial instruments approximates their carrying values at December 31, 2012 and December 30, 2011. The Company places its cash and cash equivalents with high credit quality institutions. At times, such investments may be in excess of the Federal Deposit Insurance Corporation insurance limit; however, the Company believes that its credit risk exposure is not significant due to the high credit quality of the institutions. The Company routinely assesses the financial strength of its customers, monitors past due balances based on contractual terms, and generally does not require collateral. The Company provides for doubtful accounts based on historical experience and when current market conditions indicate that collection of an amount is doubtful. The Company has a concentration of credit risk with customers in the U.S. home improvement retail, U.S. and European RV, U.S. and European commercial construction and U.S. home improvement contractor industries.