Financial Instruments

6 Months Ended

Jun. 26, 2011

Financial Instruments

Financial Instruments

Note 8 — Financial instruments

The Company uses derivative instruments for risk management purposes and does not utilize derivative instruments for trading or speculation purposes. Foreign exchange contracts are used to manage foreign currency transaction exposure, and the interest rate swap is used to reduce exposure to interest rate changes. These derivative instruments, whose settlement dates extend through December 2012, are designated as cash flow hedges and are recorded on the balance sheet at fair market value. The effective portion of the gains or losses on derivatives is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. See Note 9, "Fair value measurement" for additional information.

The following table provides the location and fair values of derivative instruments designated as hedging instruments in the condensed consolidated balance sheet as of June 26, 2011 and December 31, 2010:

	June 26, 2011 Fair Value		December 31, 2010 Fair Value
	(Dollars in thousands)
Asset derivatives:
Foreign exchange contracts:
Other assets – current	$	419	$	880
Total asset derivatives	$	419	$	880
Liability derivatives:
Interest rate swap:
Derivative liabilities – current	$	15,251	$	15,004
Other liabilities – noncurrent		3,619		9,566
Foreign exchange contracts:
Derivative liabilities – current		247		630
Other liabilities – noncurrent		11		—
Total liability derivatives	$	19,128	$	25,200

The following table provides the amount of the gains and losses attributable to derivative instruments in cash flow hedging relationships that were reported in other comprehensive income ("OCI"), and the location and amount of gains and losses attributable to such derivatives that were reclassified from accumulated other comprehensive income ("AOCI") to the condensed consolidated statement of income for the three and six months ended June 26, 2011 and June 27, 2010:

	After Tax Gain/(Loss) Recognized in OCI
	Three Months Ended						Six Months Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
	(Dollars in thousands)
Interest rate swap	$	1,694		$	161		$	3,351		$	(151	)
Foreign exchange contracts		(275	)		(527	)		(26	)		620
Total	$	1,419		$	(366	)	$	3,325		$	469

	Pre-Tax (Gain)/Loss Reclassified from AOCI into Income
	Three Months Ended						Six Months Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
	(Dollars in thousands)
Interest rate swap:
Interest expense	$	3,935		$	4,584		$	7,655		$	9,164
Foreign exchange contracts:
Net revenues		—			(10	)		—			10
Cost of goods sold		(78	)		(1,120	)		(662	)		(1,855	)
Income from discontinued operations		(333	)		89			(768	)		58
Total	$	3,524		$	3,543		$	6,225		$	7,377

For the three and six months ended June 26, 2011 and June 27, 2010, there was no reclassification from AOCI to income resulting from ineffectiveness related to the Company's derivative instruments.

The following table provides information on the changes in AOCI related to derivative instruments, net of tax, for the six months ended June 26, 2011 and June 27, 2010:

	June 26, 2011			June 27, 2010
	(Dollars in thousands)
Balance at beginning of year	$	(15,262	)	$	(17,343	)
Additions and revaluations		(294	)		(3,897	)
Loss reclassified from AOCI into income		3,805			4,343
Tax rate adjustment		(186	)		23
Balance at end of period	$	(11,937	)	$	(16,874	)

Based on interest rates and exchange rates at June 26, 2011, approximately $9.6 million of unrealized after tax losses within AOCI are expected to be reclassified from AOCI during the next twelve months. However, the actual amount reclassified from AOCI could vary due to future changes in interest rates and exchange rates.