Fair Value of Financial Instruments

9 Months Ended

Sep. 25, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our financial instruments consist primarily of cash equivalents, accounts receivable, accounts payable, derivative financial instruments and debt, including obligations under capital leases. The carrying values of financial instruments other than derivative financial instruments and fixed-rate debt approximated their fair values as of September 25, 2011 and December 26, 2010 due to their short-term maturities or market rates of interest. Derivative financial instruments were recorded at fair value (Note 7). As of September 25, 2011 and December 26, 2010, the fair value of our floating-rate debt, consisting of our asset-based revolving credit facility and the revolving loan under our Canadian credit facility, approximated carrying value due to our ability to borrow at comparable terms in the open market.

The following table presents the carrying values and fair values of our fixed-rate debt as of September 25, 2011 and December 26, 2010 (in thousands):

	Carrying value		Fair value
	September 25, 2011		September 25, 2011
10.5% Senior Secured Notes due November 2013, net	$	296,569	$	303,000
8.5% Senior Subordinated Notes due February 2014	325,000		282,831
	Carrying value		Fair value
	December 26, 2010		December 26, 2010
10.5% Senior Secured Notes due November 2013, net	$	295,536	$	319,500
8.5% Senior Subordinated Notes due February 2014	325,000		295,100

The estimated fair values of the senior secured notes and the senior subordinated notes were determined using Level 1 inputs in the fair value hierarchy, as defined in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures and were based on the last trade price of the debt prior to close of trading on September 23, 2011 and December 23, 2010, the last business day of each respective fiscal period.

The fair value hierarchy consists of three levels:

• Level 1 fair values are valuations that the entity has the ability to access and that are based on quoted market prices in active markets for identical assets or liabilities;

• Level 2 fair values are valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities; and

• Level 3 fair values are valuations based on inputs that are supported by little or no market activity, and that are significant to the fair value of the assets or liabilities.

On a recurring basis prior to their expiration date in February 2011, we measured our interest rate swap agreements (Note 7) at fair value using an income approach and Level 2 inputs in the fair value hierarchy. The income approach consists of a discounted cash flow model that takes into account the present value of future cash flows under the terms of the contracts incorporating observable market inputs as of the reporting date such as prevailing interest rates. Both the counterparty’s credit risk and our credit risk were considered in the fair value determination.