Financial Instruments, Derivatives And Hedging Activities

9 Months Ended

Sep. 24, 2011

Financial Instruments, Derivatives And Hedging Activities [Abstract]

Financial Instruments, Derivatives And Hedging Activities

7. Financial Instruments, Derivatives and Hedging Activities

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, trade accounts receivable, other assets (non-derivatives), short-term borrowings and trade accounts payable approximate fair value because of the short maturity of these instruments. The following table presents the carrying amounts and estimated fair values of the Company's other financial instruments at September 24, 2011 and December 25, 2010. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.

	September 24, 2011
	Fair Value								Carrying Amount
	Level 1		Level 2		Level 3		Total
	(thousands)
Financial assets:
Timber notes receivable
Wachovia	$	—	$	933,483	$	—	$	933,483	$	817,500
Lehman	$	—	$	—	$	81,750	$	81,750	$	81,750
Financial liabilities:
Recourse debt	$	79,236	$	163,467	$	—	$	242,703	$	270,044
Non-recourse debt
Wachovia	$	—	$	850,195	$	—	$	850,195	$	735,000
Lehman	$	—	$	—	$	81,750	$	81,750	$	735,000
	December 25, 2010
	Fair Value								Carrying Amount
	Level 1		Level 2		Level 3		Total
	(thousands)
Financial assets:
Timber notes receivable
Wachovia	$	—	$	888,288	$	—	$	888,288	$	817,500
Lehman	$	—	$	—	$	81,750	$	81,750	$	81,750
Financial liabilities:
Recourse debt	$	—	$	255,519	$	—	$	255,519	$	274,995
Non-recourse debt
Wachovia	$	—	$	811,093	$	—	$	811,093	$	735,000
Lehman	$	—	$	—	$	81,750	$	81,750	$	735,000

In establishing a fair value, there is a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The basis of the fair value measurement is categorized in three levels, in order of priority, described as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable, thus reflecting assumptions about the market participants.

The carrying amounts shown in the table are included in the Consolidated Balance Sheets under the indicated captions. The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

• Timber notes receivable: The fair value of the Wachovia Guaranteed Installment Notes is determined as the present value of expected future cash flows discounted at the current interest rate for loans of similar terms with comparable credit risk (Level 2 inputs). The fair value of the Lehman Guaranteed Installment Note reflects the estimated future cash flows of the note considering the estimated effects of the Lehman bankruptcy (Level 3 inputs).

• Recourse debt: The Company's debt instruments are not widely traded. Recourse debt for which there were trades on the last day of the period (the "measurement date") was valued using the unadjusted quoted price from the last trade on the measurement date (Level 1 input). Recourse debt for which there were no transactions on the measurement date was valued based on quoted market prices near the measurement date when available or by discounting the future cash flows of each instrument using rates based on the most recently observable trade or using rates currently offered to the Company for similar debt instruments of comparable maturities (Level 2 inputs).

• Non-recourse debt: The fair value of the Securitization Notes supported by Wachovia is estimated by discounting the future cash flows of the instrument at rates currently available to the Company for similar instruments of comparable maturities (Level 2 inputs). The Securitization Notes supported by Lehman is estimated based on the future cash flows of the Lehman Guaranteed Installment Note (the proceeds from which are the sole source of payment of this note) in a bankruptcy proceeding (Level 3 inputs).

During the first nine months of 2011, there was no change in assets and liabilities measured at estimated fair value using Level 3 inputs.

Derivatives and Hedging Activities

Changes in foreign currency exchange rates expose the Company to financial market risk. The Company occasionally uses derivative financial instruments, such as forward exchange contracts, to manage its exposure associated with commercial transactions and certain liabilities that are denominated in a currency other than the currency of the operating unit entering into the underlying transaction. The Company does not enter into derivative instruments for any other purpose. The Company does not speculate using derivative instruments. The fair values of derivative financial instruments were not material at the end of the third quarter of 2011 or at the end of fiscal year 2010.