Quarterly report pursuant to Section 13 or 15(d)

Derivative Financial Instruments

v2.4.0.6
Derivative Financial Instruments
 9 Months Ended
Sep. 30, 2012
Derivative Financial Instruments [Abstract]  
Derivative Financial Instruments

17) Derivative Financial Instruments

At September 29, 2012, we had interest rate swaps consisting of the following:

 

  a) An interest rate swap with a notional amount of approximately $2.2 million at September 29, 2012, entered into on February 6, 2006, related to the Company’s Series 1999 New York Industrial Revenue Bond which effectively fixes the rate at 3.99% plus a spread based on the Company’s leverage ratio on this obligation through February 1, 2016.

 

  b) An interest rate swap with a notional amount of $6.0 million at September 29, 2012, entered into on March 19, 2009 related to the Company’s term note issued January 30, 2009. The swap effectively fixes the rate at 2.115% plus a spread based on the Company’s leverage ratio on the notional amount (which decreases in concert with the scheduled note repayment schedule). The swap agreement became effective October 1, 2009 and expires January 30, 2014.

At September 29, 2012 and December 31, 2011, the fair value of interest rate swaps was a liability of $0.3 million and $0.4 million respectively, which is included in other long-term liabilities (See Note 16). Amounts expected to be reclassified to earnings in the next 12 months is approximately $0.1 million.

To the extent the interest rate swaps are not perfectly effective in offsetting the change in the value of the payments being hedged; the ineffective portion of these contracts is recognized in earnings immediately as interest expense. Ineffectiveness, if any, was not significant for the three and nine months ended September 29, 2012 and October 1, 2011, respectively. The Company classifies the cash flows from hedging transactions in the same category as the cash flows from the respective hedged items. Amounts from ineffectiveness, if any, to be reclassified during 2012 are not expected to be significant.

 

Activity in accumulated other comprehensive income (“AOCI”) related to these derivatives is summarized below:

 

                                 
    Nine Months Ended     Three Months Ended  
(In thousands)   September 29,
2012		     October 1,
2011		     September 29,
2012		     October 1,
2011		  

Derivative balance at the beginning of the period in AOCI

   $ (256 )    $ (338 )    $ (206 )    $ (302 ) 
         

Net deferral in AOCI of derivatives:

                                

Net (increase) decrease in fair value of derivatives

     (48 )      (161 )      (10 )      (62 ) 

Tax effect

     17       57       4       22  
   

 

 

    

 

 

    

 

 

    

 

 

  
      (31 )      (104 )      (6 )      (40 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

Net reclassification from AOCI into earnings:

                                

Reclassification from AOCI into earnings – interest expense

     163       230       50       76  

Tax effect

     (56 )      (81 )      (18 )      (27 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  
      107       149       32       49  
   

 

 

    

 

 

    

 

 

    

 

 

  

Net change in derivatives for the period

     76       45       26       9  
   

 

 

    

 

 

    

 

 

    

 

 

  

Derivative balance at the end of the period in AOCI

   $ (180 )    $ (293 )    $ (180 )    $ (293 )