Derivative Financial Instruments:

Derivative financial instruments are used within the Partnership’s overall risk management program to manage certain interest rate and foreign currency risks. By utilizing a derivative instrument to hedge our exposure to LIBOR rate changes, the Partnership is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, hedging instruments are placed with a counterparty that the Partnership believes poses minimal credit risk.

The Partnership does not use derivative financial instruments for trading purposes.

In September 2010 the Partnership entered into several forward-starting swap agreements ("September 2010 swaps") to effectively convert a total of $600 million of variable-rate debt to fixed rates beginning in October 2011. As a result of the February 2011 amendment to the 2010 Credit Agreement, the LIBOR floor on the term loan portion of its credit facilities decreased to 100 bps from 150 bps, causing a mismatch in critical terms of the September 2010 swaps and the underlying debt. Because of the mismatch of critical terms, the Partnership determined the September 2010 swaps, which were originally designated as cash flow hedges, were no longer highly effective, resulting in the de-designation of the swaps as of the end of February 2011. As a result of this ineffectiveness, gains of $7.2 million recorded in accumulated other comprehensive income (AOCI) through the date of de-designation are being amortized through December 2015.

In March 2011, the Partnership entered into several additional forward-starting basis-rate swap agreements ("March 2011 swaps") that, when combined with the September 2010 swaps, effectively converted $600 million of variable-rate debt to fixed rates beginning in October 2011. The September 2010 swaps and the March 2011 swaps were jointly designated as cash flow hedges, maturing in December 2015 and had fixed LIBOR at a weighted average rate of 2.46%. For the period that the September 2010 swaps were de-designated, their fair value decreased by $3.3 million, the offset of which was recognized as a direct charge to the Partnership's earnings and recorded to “Net effect of swaps” on the consolidated statement of operations along with the regular amortization of “Other comprehensive income (loss)” balances related to these swaps. No other ineffectiveness related to these swaps was recorded in any period presented.

In May 2011, the Partnership entered into four additional forward-starting basis-rate swap agreements ("May 2011 swaps") that effectively converted another $200 million of variable-rate debt to fixed rates beginning in October 2011. These swaps, which were designated as cash flow hedges, mature in December 2015 and fixed LIBOR at a weighted average rate of 2.54%.

As a result of the 2013 Credit Agreement, the previously described swaps were de-designated as the spreads of the 2013 Credit Agreement decreased to 75 bps from 100 bps in the Amended 2010 Credit Agreement. The May 2011 swaps remain de-designated as the amount of variable rate debt decreased to $630 million, resulting in no hedging relationship for these swaps. On March 4, 2013, the Partnership entered into several forward-starting swap agreements ("March 2013 swaps") that were not designated as a cash flow hedge on that date. On March 6, 2013, the March 2013 swaps were combined with the September 2010 swaps and the March 2011 swaps (together referred to as the "Combination Swaps"), and designated as cash flow hedges, effectively converting $600 million of variable-rate debt to fixed rates. The Combination Swaps, which were designated as cash flow hedges, mature in December 2015 and fix LIBOR at a weighted average rate of 2.331%. At the time of the de-designation, the fair market value of the September 2010 swaps and March 2011 swaps was $22.2 million. Amounts in Accumulated Other Comprehensive Income (“AOCI”) at the time of de-designation related to these swaps was $26.1 million. This amount is being amortized out of AOCI into expense in "Net effect of swaps" in the unaudited condensed consolidated statements of operations and comprehensive income through December 2015. At the time of the de-designation, the fair market value of the May 2011 swaps was $7.8 million and was immediately recognized into expense in "Net effect of swaps" in the unaudited condensed consolidated statements of operations. During the third quarter of 2013, the Combination Swaps were de-designated as the hedge effectiveness testing indicated that these swaps would be ineffective throughout the remaining periods until maturity. This de-designation had no effect on the unaudited condensed consolidated statements of operations as previous amounts recorded in AOCI had already been accounted for on March 6, 2013.

During the third quarter of 2013, the Partnership entered into three forward-starting interest rate swap agreements ("2013 forwards") that will effectively convert $400 million of variable-rate debt to fixed rates beginning in December of 2015. These swaps, which were designated as cash flow hedges, mature on December 31, 2018 and fix LIBOR at a weighted average rate of 3.00%.

The fair market value of the derivative portfolio at September 29, 2013 was a liability of $31.6 million, which was recorded in “Derivative Liability” on the condensed consolidated balance sheet.

In 2007, the Partnership entered into two cross-currency swap agreements, which effectively converted $268.7 million of term debt at the time, and the associated interest payments, related to its wholly owned Canadian subsidiary from variable U.S. dollar denominated debt to fixed-rate Canadian dollar denominated debt. The Partnership originally designated these cross-currency swaps as foreign currency cash flow hedges. Cash flows related to these swap agreements were included in interest expense over the term of the agreement. These swap agreements expired in February 2012.

In May 2011 and July 2011, the Partnership entered into several foreign currency swap agreements to fix the exchange rate on approximately 75% of the termination payment associated with the cross-currency swap agreements that expired in February 2012. The Partnership did not seek hedge accounting treatment on these foreign currency swaps, and as such, changes in fair value of the swaps flowed directly through earnings along with changes in fair value on the related, de-designated cross-currency swaps. In February 2012, all of the cross-currency and related currency swap agreements were settled for $50.5 million.

Fair Value of Derivative Instruments in Condensed Consolidated Balance Sheet:



(In thousands)	Condensed Consolidated Balance Sheet Location	Fair Value as of			Fair Value as of			Fair Value as of
(In thousands)	Condensed Consolidated Balance Sheet Location	September 29, 2013			December 31, 2012			September 30, 2012
Derivatives designated as hedging instruments:
Interest rate swaps	Derivative Liability	$	(5,483	)	$	(32,260	)	$	(34,708	)
Total derivatives designated as hedging instruments		$	(5,483	)	$	(32,260	)	$	(34,708	)
Derivatives not designated as hedging instruments:
Interest rate swaps	Derivative Liability	$	(26,163	)	$	—		$	—
Total derivatives not designated as hedging instruments		$	(26,163	)	$	—		$	—
Net derivative liability		$	(31,646	)	$	(32,260	)	$	(34,708	)

The following table presents our 2013 forwards which mature December 31, 2018, and the Combination Swaps and May 2011 swaps which mature December 15, 2015, along with their notional amounts and their fixed interest rates.



	Interest Rate Swaps
($'s in thousands)	Derivatives designated as hedging instruments				Derivatives not designated as hedging instruments
	Notional Amounts		LIBOR Rate		Notional Amounts		LIBOR Rate
	$	200,000	3.00	%	$	200,000	2.27	%
	100,000		3.00	%	150,000		2.43	%
	100,000		3.00	%	75,000		2.30	%
					70,000		2.54	%
					50,000		2.54	%
					50,000		2.54	%
					50,000		2.43	%
					50,000		2.29	%
					50,000		2.29	%
					30,000		2.54	%
					25,000		2.30	%
Total $'s / Average Rate	$	400,000	3.00	%	$	800,000	2.38	%

Effects of Derivative Instruments on Income (Loss) and Other Comprehensive Income (Loss) for the three-month periods ended September 29, 2013 and September 30, 2012:



(In thousands)	Amount of Gain (Loss) Recognized in Accumulated OCI on Derivatives (Effective Portion)					Amount and Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Amount and Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
Derivatives designated as Cash Flow Hedging Relationships	Three months ended			Three months ended			Three months ended		Three months ended				Three months ended		Three months ended
Derivatives designated as Cash Flow Hedging Relationships	9/29/13			9/30/12			9/29/13		9/30/12				9/29/13		9/30/12
Interest rate swaps	$	(5,483	)	$	438	Interest Expense	$	—	$	(2,990	)	Net effect of swaps	$	—	$	—



(In thousands)	Amount and Location of Gain (Loss) Recognized in Income on Derivative
Derivatives not designated as Cash Flow Hedging Relationships		Three months ended		Three months ended
		9/29/13		9/30/12
Interest rate swaps ⁽¹⁾	Net effect of swaps	609		—
		$	609	$	—


(1)	The May 2011 interest rate swaps were de-designated in March 2013. The Combination Swaps were de-designated in July 2013.

During the quarter ended September 29, 2013, in addition to gains of $0.6 million recognized in income on the derivatives not designated as cash flow hedges (as noted in the tables above), $2.0 million of expense representing the regular amortization of amounts in AOCI was recorded in the condensed consolidated statements of operations for the quarter. The effect of these amounts resulted in a charge to earnings of $1.4 million recorded in “Net effect of swaps.”

For the three-month period ended September 30, 2012, $0.2 million of income representing the amortization of amounts in AOCI was recorded in “Net effect of swaps” in the condensed consolidated statements of operations. The effect of this amortization resulted in a benefit to earnings of $0.2 million recorded in “Net effect of swaps.”

Effects of Derivative Instruments on Income (Loss) and Other Comprehensive Income (Loss) for the nine-month periods ended September 29, 2013 and September 30, 2012:



(In thousands)	Amount of Gain (Loss) Recognized in Accumulated OCI on Derivatives (Effective Portion)						Amount and Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)							Amount and Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
Derivatives designated as Cash Flow Hedging Relationships	Nine months ended			Nine months ended				Nine months ended			Nine months ended				Nine months ended		Nine months ended
Derivatives designated as Cash Flow Hedging Relationships	9/29/13			9/30/12				9/29/13			9/30/12				9/29/13		9/30/12
Interest rate swaps	$	(3,217	)	$	(2,308	)	Interest Expense	$	(2,797	)	$	(9,004	)	Net effect of swaps	$	3,703	$	—



(In thousands)	Amount and Location of Gain (Loss) Recognized in Income on Derivative
Derivatives not designated as Cash Flow Hedging Relationships		Nine months ended		Nine months ended
		9/29/13		9/30/12
Cross-currency swaps⁽¹⁾	Net effect of swaps	$	—	$	(4,999	)
Foreign currency swaps	Net effect of swaps	—		6,278
Interest rate swaps ⁽²⁾	Net effect of swaps	130		—
		$	130	$	1,279


(1)	The cross-currency swaps became ineffective and were de-designated in August 2009.


(2)	The May 2011 interest rate swaps were de-designated in March 2013. The Combination Swaps were de-designated in July 2013.

During the nine-month period ended September 29, 2013, in addition to the $3.7 million gain recognized in income on the ineffective portion of derivatives and $0.1 million gain on the derivatives not designated as cash flow hedges (as noted in the tables above), $7.8 million of expense related to the write off of OCI balances on our May 2011 swaps and $4.3 million of expense representing the regular amortization of amounts in AOCI was recorded in the condensed consolidated statements of operations for the period. The effect of these amounts resulted in a charge to earnings of $8.3 million recorded in “Net effect of swaps.”

For the nine-month period ended September 30, 2012, in addition to the $1.3 million gain recognized in income on the ineffective portion of derivatives noted in the tables above, $0.2 million of expense representing the amortization of amounts in AOCI for the swaps and $0.2 million of foreign currency gain in the period related to the U.S. dollar denominated Canadian term loan were recorded in “Net effect of swaps” in the condensed consolidated statements of operations. The net effect of these amounts resulted in a benefit to earnings of $1.3 million recorded in “Net effect of swaps.”

Effects of Derivative Instruments on Income (Loss) and Other Comprehensive Income (Loss) for the twelve-month periods ended September 29, 2013 and September 30, 2012:



(In thousands)	Amount of Gain (Loss) Recognized in Accumulated OCI on Derivatives (Effective Portion)						Amount and Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)							Amount and Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
Derivatives designated as Cash Flow Hedging Relationships	Twelve months ended			Twelve months ended				Twelve months ended			Twelve months ended				Twelve months ended		Twelve months ended
Derivatives designated as Cash Flow Hedging Relationships	9/29/13			9/30/12				9/29/13			9/30/12				9/29/13		9/30/12
Interest rate swaps	$	(769	)	$	(873	)	Interest Expense	$	(5,820	)	$	(12,027	)	Net effect of swaps	$	3,703	$	4,797



(In thousands)	Amount and Location of Gain (Loss) Recognized in Income on Derivative
Derivatives not designated as Cash Flow Hedging Relationships		Twelve months ended		Twelve months ended
		9/29/13		9/30/12
Cross-currency swaps ⁽¹⁾	Net effect of swaps	—		(4,483		)
Foreign currency swaps	Net effect of swaps	—		10,129
Interest rate swaps ⁽²⁾	Net effect of swaps	$	130	$	—
		$	130	$	5,646


(1)	The cross-currency swaps became ineffective and were de-designated in August 2009.


(2)	The May 2011 interest rate swaps were de-designated in March 2013. The Combination Swaps were de-designated in July 2013.

In addition to the $3.7 million gain recognized in income on the ineffective portion of derivatives and $0.1 million gain recognized in income on the ineffective portion of derivatives not designated as cash flow hedges (as noted in the tables above), $7.8 million of expense related to the write off of OCI balances on our May 2011 swaps and $4.1 million of expense representing the amortization of amounts in AOCI for the swaps was recorded during the trailing twelve months ended September 29, 2013 in the condensed consolidated statements of operations. The net effect of these amounts resulted in a charge to earnings for the trailing twelve month period of $8.1 million recorded in “Net effect of swaps.”

For the twelve-month period ending September 30, 2012, in addition to the $4.8 million gain recognized in income on the ineffective portion of derivatives designated as derivatives and $5.6 million of gain recognized in income on the ineffective portion of derivatives not designated as derivatives noted in the tables above, $0.1 million of income representing the amortization of amounts in AOCI for the swaps and a $0.4 million foreign currency gain in the twelve month period related to the U.S. dollar denominated Canadian term loan was recorded during the trailing twelve months ended September 30, 2012 in the condensed consolidated statements of operations. The net effect of these amounts resulted in a benefit to earnings for the trailing twelve month period of $10.9 million recorded in “Net effect of swaps.”