Derivative Financial Instruments

3 Months Ended

Mar. 27, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

Note 8 – Derivative Financial Instruments

In January 2012, the Company entered into interest rate cap agreements for an aggregate notional amount of $150 million in order to hedge the variability of cash flows related to a portion of the Company's floating rate indebtedness. These cap agreements hedge a portion of contractual floating rate interest commitments through the expiration of the agreements in January 2016. Pursuant to the agreements, the Company has capped LIBOR at 2.5% with respect to the aggregate notional amount of $150 million. In the event LIBOR exceeds 2.5% the Company will pay interest at the capped rate. In the event LIBOR is less than 2.5%, the Company will pay interest at the prevailing LIBOR rate. The Company paid $0.6 million to effectuate this cash flow hedge. Such amount is being amortized over 3 years as interest expense. During the first quarter of 2012, there was virtually no ineffectiveness related to the cash flow hedge.