Derivative Instruments and Hedging Activities

3 Months Ended

Oct. 01, 2011

Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities

8. Derivative Instruments and Hedging Activities

The Company may utilize derivative financial instruments to manage exposure to certain risks related to its ongoing operations. The primary risk managed through the use of derivative instruments is interest rate risk. In January 2011, the Company entered into an interest rate contract with an initial notional amount of $15,000 to hedge the changes in cash flows attributable to changes in the LIBOR rate associated with the five-year term loan entered into by the Company in March 2011. Under this interest rate contract, the Company pays a fixed interest rate of 3.94% and receives a variable rate based on LIBOR plus 1.85%. The notional amount of this interest rate contract is required to be 50% of the amount of the term loan through the expiration of its five-year term.

The Company is exposed to counter-party credit risk on any derivative instrument. Accordingly, as part of its risk management policy, the Company maintains strict counter-party credit guidelines and enters into any derivative instrument only with major financial institutions. The Company does not have significant exposure to any counterparty and management believes the risk of loss is remote and, in any event, would not be material.

Refer to “Note 2—Fair Value of Financial Instruments” for additional information regarding the fair value of the derivative instrument.

The following table summarizes the fair value of the Company’s derivative instrument and the line item in which it was recorded in the condensed consolidated balance sheet at October 1, 2011:

	Liability Derivative
	Balance Sheet	Fair Value
	Location	(in thousands)
Derivative designated as hedging instrument:
Interest rate contract	Accrued retirement costs and other	$	499
		$	499

Cash Flow Hedges

The following table summarizes the loss recognized in OCI and the loss reclassified from accumulated OCI into earnings for the derivative instrument designated as a cash flow hedge during the first quarter ended October 1, 2011. There were no derivative instruments held by the Company during the first quarter ended October 2, 2010.

							Loss
				Loss		Location of	(Ineffective
	Loss		Location of Loss	Reclassified		Loss	Portion) and
	Recognized		Reclassified from	from		(Ineffective	Excluded
	in OCI		Accumulated	Accumulated		Portion) and	from
	(Effective		OCI (Effective	OCI		Excluded from	Effectiveness
	Portion)		Portion)	(Effective)		Effectiveness	Testing
For the first quarter of fiscal 2012:
Interest rate contract	$	231	Interest expense	$	69	Interest expense	$	—

The estimated net amount of the loss in accumulated other comprehensive income at October 1, 2011 expected to be reclassified into net earnings within the next twelve months is $204.