Derivative Financial Instruments

9 Months Ended

Sep. 25, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

Note 8 – Derivative Financial Instruments

In January 2012, the Company entered into an interest rate cap agreement for an aggregate notional amount of $150.0 million in order to hedge the variability of cash flows related to a portion of the Company’s floating rate indebtedness. The cap agreement hedges a portion of contractual floating rate interest commitments through the expiration of the agreement in January 2016. Pursuant to the agreement, the Company has capped LIBOR at 2.5% with respect to the aggregate notional amount of $150.0 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 which is being amortized over the life of the agreement as interest expense.

During the third quarter of 2012, there was no ineffectiveness related to the cash flow hedge.