Derivative Financial Instruments (Notes)

9 Months Ended

Sep. 29, 2015

Derivative [Line Items]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Financial Instruments

The Company enters into derivative instruments solely for risk management purposes. To the extent the Company's cash-flow hedging instruments are effective in offsetting the variability in the hedged cash flows, and otherwise meet the cash flow hedge accounting criteria required by FASB Accounting Standards Codification 815, "Derivatives and Hedging", changes in the derivatives' fair value are not included in current earnings but are included in accumulated other comprehensive income (loss), net of tax. These changes in fair value will be reclassified into earnings at the time of the forecasted transaction. By using these instruments, the Company exposes itself, from time to time, to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. The Company minimizes this credit risk by entering into transactions with high-quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from changes in interest rates. The Company minimizes this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

On July 16, 2015, the Company entered into two forward-starting interest rate swap agreements with an aggregate initial notional value of $242.5 million to hedge a portion of the cash flows of its term loan borrowings. For each of the swaps, the Company has agreed to exchange with a counterparty the difference between fixed and variable interest amounts calculated by reference to an agreed-upon principal amount.

The following table summarizes the Company's interest rate swaps as of September 29, 2015:

Trade Date	Effective Date	Term (in Years)	Notional Amount (in thousands)		Fixed Rate
July 16, 2015	July 11, 2016	4	$	100,000	1.75	%
July 16, 2015	July 18, 2016	5	142,500		1.97	%

The notional amount for the interest rate swap with an effective date of July 18, 2016 decreases quarterly by $1.9 million over the five-year term of the interest rate swap beginning in September 2016.

The interest rate swaps, which have been designated and qualify as cash flow hedges, are recorded on the Company's Consolidated Balance Sheets at fair value. The change in fair value of the interest rate swaps resulted in a loss of approximately $4.9 million as of September 29, 2015, which is recorded in Accumulated other comprehensive income (loss) and Other long-term liabilities in the Company's Consolidated Balance Sheets. A net of tax loss of approximately $0.4 million is expected to be reclassified from accumulated other comprehensive income (loss) to earnings within the next twelve months. For the thirteen weeks ended September 29, 2015, the Company did not recognize any gain or loss due to hedge ineffectiveness.

The Company does not hold or use derivative instruments for trading purposes. The Company also does not have any derivatives not designated as hedging instruments and has not designated any non-derivatives as hedging instruments.