Long-Term Debt, Financial Instruments, And Derivatives

9 Months Ended

Sep. 25, 2011

Long-Term Debt, Financial Instruments, And Derivatives [Abstract]

Long-Term Debt, Financial Instruments, And Derivatives

5.In the first quarter of 2010, the Company established a new financing structure; the Company simultaneously amended and extended its bank term loan facility and issued senior notes.  As a result, the Company immediately expensed previously deferred debt issuance costs of $1.8 million.  The senior notes mature in 2017 and have a face value of $300 million, an interest rate of 11.75%, and were issued at a price equal to 97.69% of face value.  The proceeds from the senior notes were used to pay down existing bank credit facilities. The bank term loan facility matures in March 2013 and bears an interest rate of LIBOR plus a margin ranging from 3.75% to 4.75% (4.5% at September 25, 2011), determined by the Company's leverage ratio, as defined in the agreement.  The agreements have two main financial covenants: a leverage ratio and a fixed charge coverage ratio which involve debt levels, interest expense as well as other fixed charges, and a rolling four-quarter calculation of EBITDA, all as defined in the agreements.  The Company pledged its cash and assets as well as the stock of its subsidiaries as collateral; the Company's subsidiaries also guaranteed the debt of the parent company.  Additionally, there are restrictions on the Company's ability to pay dividends (none are allowed in 2011), make capital expenditures above certain levels, repurchase its stock, and engage in certain other transactions such as making investments or entering into capital leases above certain levels.  The bank term loan facility contains an annual requirement to use excess cash flow (as defined within the agreement) to repay debt.  Other factors, such as the sale of assets, may also result in a mandatory prepayment of a portion of the bank term loan.  The Company was in compliance with all covenants and expects that the covenants will continue to be met.  The Company is currently evaluating its options for refinancing, amending and/or extending the $363 million of bank debt due March 2013.    

          The following table includes information about the carrying values and estimated fair values of the Company's financial instruments at September 25, 2011 and December 26, 2010:

			September 25, 2011		December 26, 2010
(In thousands)			Carrying  Amounts	Fair Value	Carrying  Amounts	Fair Value
Assets
	Investments
		Trading	$     195	$         195	$      249	$             249
Liabilities
	Interest rate swaps		-	-	6,891	6,891
	Long-term debt:
		Bank term loan	363,126	305,490	369,412	365,980
		11.75% senior notes	294,672	265,032	293,929	320,608
		Revolving credit facility ($58 million available at 9/25/11)	7,500	6,310	-	-

Trading securities held by the Supplemental 401(k) plan are carried at fair value and are determined by reference to quoted market prices. The fair value of the bank term loan and revolving credit facility debt in the chart above was estimated using discounted cash flow analyses and an estimate of the Company's bank borrowing rate (by reference to publicly traded debt rates as of September 25, 2011) for similar types of borrowings. As of September 25, 2011, the fair value of the 11.75% Senior Notes was valued at the most recent trade prior to the end of the quarter which approximates fair value. Under the fair value hierarchy, the Company's trading securities fall under Level 1 (quoted prices in active markets), and its long term debt falls under Level 2 (other observable inputs).

         In the third quarter of 2006, the Company entered into several interest rate swaps as part of an overall strategy to manage interest cost and risk associated with variable interest rates, primarily short-term changes in LIBOR.  These interest rate swaps were cash flow hedges with original notional amounts totaling $300 million; swaps with notional amounts of $100 million matured in August of 2009 and swaps with notional amounts of $200 million matured in August 2011. As of December 26, 2010, the interest rate swaps were carried at fair value (in the line item "accrued expenses and other liabilities" on the Consolidated Condensed Balance Sheets) based on the present value of the estimated cash flows the Company would have received or paid to terminate the swaps; the Company applied a discount rate that was predicated on quoted LIBOR prices and current market spreads for unsecured borrowings.In the first nine months of 2011 and 2010, $7.3 million and $8.0 million, respectively, were reclassified from Other Comprehensive Income (OCI) into interest expense on the Consolidated Condensed Statement of Operations as the effective portion of the interest rate swaps.The pretax charge deferred in OCI for the first nine months of 2011 and 2010 was $6.9 million and $5.0 million, respectively.