Derivative Financial Instruments

3 Months Ended

Mar. 29, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments:

Derivative financial instruments are used within the Partnership’s overall risk management program to manage certain interest rate and foreign currency risks. By utilizing a derivative instrument to hedge our exposure to LIBOR rate changes, the Partnership is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, hedging instruments are placed with a counterparty that the Partnership believes poses minimal credit risk.

The Partnership does not use derivative financial instruments for trading purposes.

We have entered into several interest rate swaps that fix all of our variable rate term-debt payments. As of March 29, 2015, we have $800 million of variable-rate debt to fixed rates swaps that mature in December 2015 and fix LIBOR at a weighted average rate of 2.38%. These swaps have been de-designated as cash flow hedges. During the third quarter and fourth quarter of 2013, we entered into four forward-starting interest rate swap agreements that will effectively convert $500 million of variable-rate debt to fixed rates beginning in December of 2015. These swaps, which were designated as cash flow hedges, mature on December 31, 2018 and fix LIBOR at a weighted average rate of 2.94%.

Fair Value of Derivative Instruments and the Classification in Condensed Consolidated Balance Sheet:

(In thousands)	Condensed Consolidated Balance Sheet Location	Fair Value as of			Fair Value as of			Fair Value as of
		March 29, 2015			December 31, 2014			March 30, 2014
Derivatives designated as hedging instruments:
Interest rate swaps	Derivative Liability	$	(19,252	)	$	(14,649	)	$	(6,657	)
Total derivatives designated as hedging instruments		$	(19,252	)	$	(14,649	)	$	(6,657	)
Derivatives not designated as hedging instruments:
Interest rate swaps	Current Derivative Liability	$	(9,989	)	$	(11,791	)	$	—
Interest rate swaps	Derivative Liability	$	—		$	—		$	(21,132	)
Total derivatives not designated as hedging instruments		$	(9,989	)	$	(11,791	)	$	(21,132	)
Net derivative liability		$	(29,241	)	$	(26,440	)	$	(27,789	)

Derivatives Designated as Hedging Instruments

Changes in fair value of highly effective hedges are recorded as a component of accumulated other comprehensive loss in the unaudited condensed consolidated balance sheets. Any ineffectiveness is recognized immediately in income. Amounts recorded as a component of accumulated other comprehensive loss are reclassified into earnings in the same period the forecasted transactions affect earnings. As of March 29, 2015 we have no amounts that are forecasted to be reclassified into earnings in the next twelve months.

Derivatives Not Designated as Hedging Instruments

Certain interest rate swap contracts were deemed ineffective in prior years and no longer qualified for hedge accounting. As a result of discontinued hedge accounting, the instruments are prospectively adjusted to fair value each reporting period through "Net effect of swaps" on the unaudited condensed consolidated statements of operations and comprehensive income. The amounts that were previously recorded as a component of accumulated other comprehensive loss prior to the de-designation are reclassified to earnings and a corresponding realized gain or loss will be recognized when the forecasted cash flow occurs. As of March 29, 2015, approximately $3.2 million of losses remain in accumulated comprehensive loss related to the effective cash flow hedge contracts prior to de-designation and all of which will be reclassified to earnings within the next 12 months.

The following table presents our derivative portfolio along with their notional amounts and their fixed interest rates as of March 29, 2015.

	Interest Rate Swaps
($'s in thousands)	Derivatives designated as hedging instruments				Derivatives not designated as hedging instruments
	Notional Amounts		Fixed Rate		Notional Amounts		Fixed Rate
	$	200,000	3.00	%	$	200,000	2.27	%
	100,000		3.00	%	150,000		2.43	%
	100,000		3.00	%	75,000		2.30	%
	100,000		2.70	%	70,000		2.54	%
					50,000		2.54	%
					50,000		2.54	%
					50,000		2.43	%
					50,000		2.29	%
					50,000		2.29	%
					30,000		2.54	%
					25,000		2.30	%
Total $'s / Average Rate	$	500,000	2.94	%	$	800,000	2.38	%

Effects of Derivative Instruments on Income (Loss) and Other Comprehensive Income (Loss) for the three-month periods ended March 29, 2015 and March 30, 2014:

(In thousands)	Amount of Gain (Loss) Recognized in  Accumulated OCI on Derivatives (Effective Portion)						Amount and Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)					Amount and Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
Derivatives designated as Cash Flow Hedging Relationships	Three months ended			Three months ended				Three months ended		Three months ended			Three months ended		Three months ended
	3/29/15			3/30/14				3/29/15		3/30/14			3/29/15		3/30/14
Interest rate swaps	$	(4,602	)	$	(2,742	)	Interest  Expense	$	—	$	—	Net effect of swaps	$	—	$	—

(In thousands)	Amount and Location of Gain (Loss) Recognized in Income on Derivative
Derivatives not designated as Cash Flow Hedging Relationships		Three months ended		Three months ended
		3/29/15		3/30/14
Interest rate swaps	Net effect of swaps	$	1,802	$	1,617

During the quarter ended March 29, 2015, the Partnership recognized $1.8 million in income for the gain on the derivatives not designated as cash flow hedges and $1.7 million of expense representing the regular amortization of amounts in AOCI. The effect of these amounts resulted in a benefit to earnings of $0.1 million recorded in “Net effect of swaps.”

During the quarter ended March 30, 2014, the Partnership recognized $1.6 million in income for the gain on the derivatives not designated as cash flow hedges and $2.0 million of expense representing the amortization of amounts in AOCI. The effect of these amounts resulted in a charge to earnings of $0.4 million recorded in “Net effect of swaps.”