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Derivative Financial Instruments | 6 Months Ended
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Jul. 01, 2012
Derivative Financial Instruments [Abstract] |
Derivative Financial Instruments |
11. | Derivative Financial Instruments
Interest As of July 1, 2012, the Company has $1.0 million in gains from terminated interest rate swap agreements to be amortized ($.3 million over the next 5 months and $.7 million over the next 33 months). During both YTD 2012 and YTD 2011, the Company amortized deferred gains related to terminated interest rate swap agreements and forward interest rate agreements, which reduced interest expense by $.6 million. The Company had no interest rate swap agreements outstanding at July 1, 2012, January 1, 2012 and July 3, 2011. Commodities The Company is subject to the risk of loss arising from adverse changes in commodity prices. In the normal course of business, the Company manages these risks through a variety of strategies, including the use of derivative instruments. The Company does not use derivative instruments for trading or speculative purposes. All derivative instruments are recorded at fair value as either assets or liabilities in the Company’s consolidated balance sheets. These derivative instruments are not designated as hedging instruments under GAAP and are used as “economic hedges” to manage commodity price risk. Derivative instruments are marked to market on a monthly basis and recognized in earnings consistent with the expense classification of the underlying hedged item. Settlements of derivative agreements are included in cash flows from operating activities on the Company’s consolidated statements of cash flows. The Company suspended the use of derivative instruments to hedge its projected diesel fuel, unleaded gasoline and aluminum purchase requirements at the end of 2011. The Company uses several different financial institutions for commodity derivative instruments to minimize the concentration of credit risk. While the Company is exposed to credit loss in the event of nonperformance by these counterparties, the Company does not anticipate nonperformance by these parties. The Company has master agreements with the counterparties to its derivative financial agreements that provide for net settlement of derivative transactions. The Company used derivative instruments to hedge all of the Company’s projected diesel fuel and unleaded gasoline purchases for the second, third and fourth quarters of 2011. These derivative instruments related to diesel fuel and unleaded gasoline used by the Company’s delivery fleet and other vehicles. The Company used derivative instruments to hedge approximately 75% of the Company’s aluminum purchase requirements in 2011. The following table summarizes Q2 2012 and Q2 2011 net gains and losses on the Company’s fuel and aluminum derivative financial instruments and the classification, either as cost of sales or selling, delivery and administrative (“S,D&A”) expenses, of such net gains and losses in the consolidated statements of operations:
|  |  |  | Second Quarter |
In Thousands |  | Classification of Gain (Loss) |  | 2012 |  |  | 2011 |
Fuel hedges – contract premium and contract settlement |  | S,D&A expenses |  | $ | 0 |  |  | $ | (105 | )
Fuel hedges – mark-to-market adjustment |  | S,D&A expenses |  |  | 0 |  |  |  | (25 | )
Aluminum hedges – contract premium and contract settlement |  | Cost of sales |  |  | 0 |  |  |  | 783 |
Aluminum hedges – mark-to-market adjustment |  | Cost of sales |  |  | 0 |  |  |  | (1,708 | )
Total Net Gain (Loss) |  |  |  | $ | 0 |  |  | $ | (1,055 | )
The following table summarizes YTD 2012 and YTD 2011 net gains and losses on the Company’s fuel and aluminum derivative financial instruments and the classification, either as cost of sales or selling, delivery and administrative (“S,D&A”) expenses, of such net gains and losses in the consolidated statements of operations:
|  |  |  | First Half |
In Thousands |  | Classification of Gain (Loss) |  | 2012 |  |  | 2011 |
Fuel hedges – contract premium and contract settlement |  | S,D&A expenses |  | $ | 0 |  |  | $ | 66 |
Fuel hedges – mark-to-market adjustment |  | S,D&A expenses |  |  | 0 |  |  |  | (171 | )
Aluminum hedges – contract premium and contract settlement |  | Cost of sales |  |  | 0 |  |  |  | 1,304 |
Aluminum hedges – mark-to-market adjustment |  | Cost of sales |  |  | 0 |  |  |  | (2,216 | )
Total Net Gain (Loss) |  |  |  | $ | 0 |  |  | $ | (1,017 | )
The following table summarizes the fair values and classification in the consolidated balance sheets of derivative instruments held by the Company as of July 1, 2012, January 1, 2012 and July 3, 2011:
|  | Balance Sheet |  | July 1, |  |  | Jan. 1, |  |  | July 3, |
In Thousands |  | Classification |  | 2012 |  |  | 2012 |  |  | 2011 |
Unamortized cost of fuel hedging agreements |  | Prepaid expenses and other current assets |  | $ | 0 |  |  | $ | 0 |  |  | $ | 526 |
Aluminum hedges at fair market value |  | Prepaid expenses and other current assets |  |  | 0 |  |  |  | 0 |  |  |  | 4,450 |
Unamortized cost of aluminum hedging agreements |  | Prepaid expenses and other current assets |  |  | 0 |  |  |  | 0 |  |  |  | 1,316 |
Total |  |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 6,292 |

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- Definition The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80784-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624171-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624181-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708775-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579245-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41641-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579240-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41635-113959 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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