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Derivative and Hedging Activities
 12 Months Ended
Dec. 25, 2012
Derivative and Hedging Activities  
Derivative and Hedging Activities

(16) Derivative and Hedging Activities

        We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments under FASB ASC 815, Derivatives and Hedging ("ASC 815"). We use interest rate-related derivative instruments to manage our exposure to fluctuations of interest rates. By using these instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. We minimize the credit risk by entering into transactions with high-quality counterparties whose credit rating is evaluated on a quarterly basis. Our counterparty in the interest rate swaps is JP Morgan Chase Bank, N.A. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices, or the market price of our common stock. We minimize market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be taken.

Interest Rate Swaps

        On October 22, 2008, we entered into an interest rate swap, starting on November 7, 2008, with a notional amount of $25.0 million to hedge a portion of the cash flows of our variable rate credit facility. We have designated the interest rate swap as a cash flow hedge of our exposure to variability in future cash flows attributable to interest payments on a $25.0 million tranche of floating rate debt borrowed under its revolving credit facility. Under the terms of the swap, we pay a fixed rate of 3.83% on the $25.0 million notional amount and receive payments from the counterparty based on the 1-month LIBOR rate for a term ending on November 7, 2015, effectively resulting in a fixed rate LIBOR component of the $25.0 million notional amount.

        On January 7, 2009, we entered into an interest rate swap, starting on February 7, 2009, with a notional amount of $25.0 million to hedge a portion of the cash flows of our variable rate credit facility. We have designated the interest rate swap as a cash flow hedge of our exposure to variability in future cash flows attributable to interest payments on a $25.0 million tranche of floating rate debt borrowed under our revolving credit facility. Under the terms of the swap, we pay a fixed rate of 2.34% on the $25.0 million notional amount and receive payments from the counterparty based on the 1-month LIBOR rate for a term ending on January 7, 2016, effectively resulting in a fixed rate LIBOR component of the $25.0 million notional amount.

        We entered into the above interest rate swaps with the objective of eliminating the variability of our interest cost that arises because of changes in the variable interest rate for the designated interest payments. Changes in the fair value of the interest rate swap will be reported as a component of accumulated other comprehensive income. We will reclassify any gain or loss from accumulated other comprehensive income, net of tax, on our consolidated balance sheet to interest expense on our consolidated statement of income and other comprehensive income when the interest rate swap expires or at the time we choose to terminate the swap. See note 14 for fair value discussion of these interest rate swaps.

        The following table summarizes the fair value and presentation in the consolidated balance sheets for derivatives designated as hedging instruments under ASC 815:

 
    
   Derivative Assets   Derivative Liabilities  
 
   Balance Sheet
Location		   December 25,
2012		   December 27,
2011		   December 25,
2012		   December 27,
2011		  

Derivative Contracts Designated as Hedging Instruments under ASC 815

   (1)                          

Interest rate swaps

       $ —   $ —   $ 4,016   $ 4,247  
                       

Total Derivative Contracts

       $ —   $ —   $ 4,016   $ 4,247  
                       
(1)
Derivative assets and liabilities are included in fair value of derivative financial instruments on the consolidated balance sheets.

        The following table summarizes the effect of derivative instruments on the consolidated statements of income and other comprehensive income for the 52 weeks ended December 25, 2012 and December 27, 2011:

 
    
    
    
    
    
    
   Amount of
Gain (Loss)
Recognized
in Income
(ineffective portion)		  
 
   Amount of Gain
(Loss) Recognized
in AOCI
(effective portion)		    
   Amount of Gain
Reclassified from
AOCI to Income
(effective portion)		   Location of
Gain (Loss)
Recognized
in Income
(ineffective
portion)		  
 
   Location of
Gain (Loss)
Reclassified
from AOCI
Income		  
 
   2012   2011   2012   2011   2012   2011  

Interest rate swaps

   $ 148   $ (1,271 )   Interest expense, net   $ 124   $ 118     —   $ —   $ —