DERIVATIVES

9 Months Ended

Oct. 01, 2011

Derivatives [Abstract]

DERIVATIVES

DERIVATIVES

        We recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. Additionally, the fair value adjustments will affect either equity or net income, depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity.

Interest Rate Swaps and Caps

        On May 27, 2010, we entered into three interest rate swap transactions to effectively convert the entire amount of our $250 million fixed-rate 5.125% Senior Notes due 2014 (the "2014 Notes") to variable-rate debt. Under the terms of the transactions, we were required to make semiannual variable-rate payments to the counterparties calculated based on three-month LIBOR rates (that are reset on the 15th day of each calendar quarter) plus 2.92%, and the counterparties were obligated to make semiannual fixed-rate payments to us of 5.125%. Concurrently, we also entered into an interest rate cap, at a cost of $2.7 million, which limits our three-month LIBOR rate exposure to 5.0%. The swap and cap transactions had an effective date of June 1, 2010 and a termination date of November 15, 2014, the date the 2014 Notes mature. On October 18, 2010, we de-designated the hedging relationship between the swaps and the 2014 Notes and received $10.2 million upon termination of the swaps. The related fair market valuation adjustment to the 2014 Notes will be amortized as a reduction of interest expense over the remaining life of the 2014 Notes.

        On December 14, 2010, we entered into three interest rate swap transactions to effectively convert the entire amount of the 2014 Notes to variable-rate debt. Under the terms of the transactions, we are required to make semiannual variable-rate payments to the counterparties calculated based on three-month LIBOR rates (which are reset on the 15th day of each calendar quarter) plus 3.46%, and the counterparties were obligated to make semiannual fixed-rate payments to us of 5.125%. The swap transactions have an effective date of December 17, 2010 and a termination date of November 15, 2014, the date the 2014 Notes mature.

        On March 3, 2011, we entered into three interest rate swap transactions to effectively convert $150 million of our 2019 Notes to variable-rate debt. Under the terms of the transactions, we were required to make semiannual variable-rate payments to the counterparties calculated based on three-month LIBOR rates (which are reset on the 15th day of each calendar quarter) plus 3.73%, and the counterparties were obligated to make semiannual fixed-rate payments to us of 6.875%. The swap transactions had an effective date of March 7, 2011 and a termination date of March 15, 2019, the date the 2019 Notes mature. On August 3, 2011 we de-designated the hedging relationship between the swaps and the 2019 Notes and received $8.1 million upon termination of the swaps. The related fair market valuation adjustment to the 2019 Notes will be amortized as a reduction of interest expense over the remaining life of the 2019 Notes.

        The swap transactions were designated as hedges of the fair value of the related notes. The fair values of the swaps are recorded either as an asset or a liability, with changes in their fair values recorded through interest expense. The changes in fair value of the notes related to the hedged portion of the notes are also recorded through interest expense. As these changes in fair value will not exactly offset each other, the net effect on earnings represents the ineffectiveness of the hedging instruments. We evaluate effectiveness under the "long haul" method of accounting. The interest rate cap has not been designated as a hedging instrument; as a result, all changes in the fair value of the cap are recorded through interest expense.

        We recorded a decrease of $0.3 million and an increase of $0.9 million in interest expense related to the ineffectiveness of the swaps for the fiscal quarter and nine months ended October 1, 2011, respectively. We recorded increases of $0.4 million and $1.1 million in interest expense related to changes in the fair value of the cap during the fiscal quarter and nine months ended October 1, 2011, respectively. We recorded a decrease of $0.8 million and an increase of $0.4 million in interest expense related to the ineffectiveness of the swaps during the fiscal quarter and nine months ended October 2, 2010, respectively. We recorded increases of $0.7 million and $2.1 million in interest expense related to changes in the fair value of the cap during the fiscal quarter and nine months ended October 2, 2010, respectively.

Foreign Currency Forward Contracts

        We use foreign currency forward contracts for the specific purpose of hedging the exposure to variability in forecasted cash flows associated primarily with inventory purchases. Fair values of foreign currency forward contracts are calculated by comparing each agreement's contractual exchange rate with the currency exchange forward and spot rates at the reporting date.

        We have outstanding forward contracts to exchange Canadian Dollars for U.S. Dollars. These contracts are designated as cash flow hedges, as the principal terms of the contracts are the same as the underlying forecasted foreign currency cash flows. Therefore, changes in the fair value of these forward contracts should be highly effective in offsetting changes in the expected foreign currency cash flows. Changes in the fair value of these contracts are recorded in accumulated other comprehensive income, net of related tax effects, with the corresponding asset or liability recorded in the balance sheet. Amounts recorded in accumulated other comprehensive income are reflected in current-period earnings when the hedged transaction affects earnings.

        Since the foreign currency derivatives we use in our risk management strategies are highly effective hedges because all the critical terms of the derivative instruments match those of the hedged item, we record no ineffectiveness related to our cash flow hedges. If foreign currency exchange rates do not change from their October 1, 2011 amounts, we estimate that any reclassifications from other comprehensive income to earnings within the next 12 months will not be material.

        The U.S. Dollar notional amounts of our Canadian Dollar - U.S. Dollar forward exchange contracts outstanding at October 1, 2011, October 2, 2010 and December 31, 2010 were $3.2 million, $8.9 million and $20.3 million, respectively.

Fair Values of Derivative Instruments

(In millions)		October 1, 2011			October 2, 2010			December 31, 2010
		Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments
	Interest rate swap contracts	Other long-term assets	$	6.3	Other long-term assets	$	9.1
	Foreign exchange contracts	Prepaid expenses and other current assets		0.1			-
	Total derivative assets		$	6.4		$	9.1
	Interest rate swap contracts					$	-	Other long-term liabilities	$	0.6
	Foreign exchange contracts				Accrued expenses and other current liabilities		0.1	Accrued expenses and other current liabilities		0.5
	Total derivative liabilities					$	0.1		$	1.1
Derivatives not designated as hedging instruments
	Interest rate cap contract	Other long-term assets		0.2	Other long-term assets		0.6	Other long-term assets		1.3
	Total derivative assets		$	0.2		$	0.6		$	1.3

Effect of Derivatives on the Statement of Operations - Derivatives Designated as Hedging Instruments

(In millions)	Location of Pretax Gain (Loss) due to Ineffectiveness Recognized in Income	Amount of Pretax Gain (Loss) due to Ineffectiveness Recognized in Income
Derivate type			Fiscal Nine Months Ended October 1, 2011			Fiscal Nine Months Ended October 2, 2010
Interest rate swap contracts	Interest expense	$	(0.9	)	$	(0.4	)

(In millions)	Amount of Pretax Gain (Loss) Recognized in Other Comprehensive Income			Amount of Pretax Gain (Loss) Reclassified from Other Comprehensive Income into Income
Derivative type	Fiscal Nine Months Ended October 1, 2011	Fiscal Nine Months Ended October 2, 2010	Location of Pretax Gain (Loss) Reclassified from Other Comprehensive Income into Income	Fiscal Nine Months Ended October 1, 2011	Fiscal Nine Months Ended October 2, 2010

Canadian Dollar - U.S. Dollar forward contracts $ (0.3 ) $ - Cost of sales $ (0.8 )  $ (0.2 ) 

Effect of Derivatives on the Statement of Operations - Derivatives Not Designated as Hedging Instruments

(In millions)	Location of Pretax Gain (Loss) Recognized in Income	Amount of Pretax Gain (Loss) Recognized in Income
Derivate type			Fiscal Nine Months Ended October 1, 2011			Fiscal Nine Months Ended October 2, 2010
Interest rate cap contract	Interest expense	$	(1.1	)	$	(2.1	)