Derivatives

9 Months Ended

Oct. 08, 2011

Derivatives

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 5 – Derivatives

                We have market risk exposure to changing interest rates primarily as a result of our borrowing activities and commodity price risk associated with anticipated purchases of diesel fuel.  Our objective in managing our exposure to changes in interest rates and commodity prices is to reduce fluctuations in earnings and cash flows.  From time-to-time we use derivative instruments, primarily interest rate swap agreements, to manage risk exposures when appropriate, based on market conditions.  We do not enter into derivative agreements for trading or other speculative purposes, nor are we a party to any leveraged derivative instrument. 

                The interest rate swap agreements are designated as cash flow hedges and are reflected at fair value in our Consolidated Balance Sheet and the related gains or losses on these contracts are deferred in stockholders’ equity as a component of other comprehensive income.  As of October 8, 2011, we have no significant liability in relation to our outstanding interest rate swap agreements, as compared to a fair value liability of $0.4 million as of January 1, 2011.  The fair value of all such liabilities is included in accrued expenses on our Consolidated Balance Sheet.  Deferred gains and losses are amortized as an adjustment to interest expense over the same period in which the related items being hedged are recognized in income.  However, to the extent that any of these contracts are not considered to be effective in accordance with ASC Topic 815 – Derivatives and Hedging (“ASC 815”) in offsetting the change in the value of the items being hedged, any changes in fair value relating to the ineffective portion of these contracts are immediately recognized in income. Our two outstanding interest rate swaps have been considered effective in accordance with ASC 815 since they began during fiscal 2008.

                Our interest rate swap agreements resulted in net payments of approximately $0.2 million and $0.3 million during the third quarters of fiscal 2011 and 2010, respectively, and resulted in net payments of $0.4 million and $0.9 million during year-to-date 2011 and 2010, respectively, which are included in interest expense on our Consolidated Statement of Income.

                As of October 8, 2011, we had two outstanding interest rate swap agreements with notional amounts totaling $17.5 million as compared to $35.0 million as of October 9, 2010, as follows (amounts in thousands):

Notional	Effective Date	Termination Date	Fixed Rate
$20,000	10/15/2009	10/15/2010	3.49%
10,000	10/15/2010	10/15/2011	3.49%

Notional	Effective Date	Termination Date	Fixed Rate
$15,000	10/15/2009	10/15/2010	3.38%
7,500	10/15/2010	10/15/2011	3.38%