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Fair Value Measurements
6 Months Ended
Jun. 30, 2012
Fair Value Measurements
12. Fair Value Measurements

Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

 

   

Level 1 – Quoted prices in active markets for identical assets or liabilities.

 

   

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

   

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

When measuring fair value, the Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs.

Fair Value of Financial Instruments

The Company’s significant financial instruments include long-term debt and interest rate swap agreements.

The fair value of the Company’s long-term debt is determined by utilizing average bid prices on or near the end of each fiscal quarter (Level 2 input). As of June 30, 2012 and July 2, 2011, the fair value of the Company’s long-term debt was approximately $2,433,249 and $1,161,212, respectively.

Derivative Financial Instruments

The fair values for the Company’s derivative financial instruments are determined using observable current market information such as the prevailing LIBOR interest rate and LIBOR yield curve rates and include consideration of counterparty credit risk. See Note 11 for disclosures related to derivative financial instruments.

The following table presents the aggregate fair value of the Company’s derivative financial instruments:

 

                                                                                           
     Fair Value Measurements Using:  
     Total
Fair
Value
     Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Interest rate swap asset at June 30, 2012

   $ 0       $ 0       $ 0       $ 0   

Interest rate swap asset at December 31, 2011

   $ 0       $ 0       $ 0       $ 0   

Interest rate swap liability at June 30, 2012

   $ 19,203       $ 0       $ 19,203       $ 0   

Interest rate swap liability at December 31, 2011

   $ 24,613       $ 0       $ 24,613       $ 0