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Financial Instruments and Risk Management | 12 Months Ended
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Sep. 24, 2011
Financial Instruments and Risk Management [Abstract] |
Financial Instruments and Risk Management |
10. | Financial Instruments and Risk Management
Cash and Cash Equivalents. The fair value of cash and cash equivalents is not materially different from their carrying amount because of the short-term maturity of these instruments. Derivative Instruments and Hedging Activities. The Partnership measures the fair value of its exchange-traded options and futures contracts using Level 1 inputs, the fair value of its interest rate swaps using Level 2 inputs and the fair value of its over-the-counter options contracts using Level 3 inputs. The Partnership's over-the-counter options contracts are valued based on an internal option model. The inputs utilized in the model are based on publicly available information as well as broker quotes. The following summarizes the fair value of the Partnership's derivative instruments and their location in the consolidated balance sheet as of September 24, 2011 and September 25, 2010, respectively:
| As of September 24, 2011 |  | As of September 25, 2010 |
Asset Derivatives | Location |  | Fair Value |  | Location |  | Fair Value |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |
Commodity options | Other current assets |  | $ | 3,710 |  | Other current assets |  | $ | 2,601 |
| Other assets |  |  | 612 |  | Other assets |  |  | - |
Commodity futures | Other current assets |  |  | 1,132 |  | Other current assets |  |  | 22 |
|  |  | $ | 5,454 |  |  |  | $ | 2,623 |
Liability Derivatives | Location |  | Fair Value |  | Location |  | Fair Value |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Interest rate swaps | Other current liabilities |  | $ | 2,662 |  | Other current liabilities |  | $ | 2,740 |
| Other liabilities |  |  | 1,934 |  | Other liabilities |  |  | 3,561 |
|  |  | $ | 4,596 |  |  |  | $ | 6,301 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Commodity options | Other current liabilities |  | $ | 2,407 |  | Other current liabilities |  | $ | 641 |
| Other liabilities |  |  | 69 |  | Other liabilities |  |  | - |
Commodity futures | Other current liabilities |  |  | - |  | Other current liabilities |  |  | 1,838 |
|  |  | $ | 2,476 |  |  |  | $ | 2,479 |
The following summarizes the reconciliation of the beginning and ending balances of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:
|  | Fair Value Measurement Using Significant Unobservable Inputs (Level 3) |
|  | Fiscal 2011 |  |  | Fiscal 2010 |
|  | Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
Beginning balance of over-the-counter options |  | $ | 1,509 |  |  | $ | 30 |  |  | $ | 1,675 |  |  | $ | 844 |
Beginning balance realized during the period |  |  | (1,509 | ) |  |  | (30 | ) |  |  | (1,434 | ) |  |  | (844 | )
Change in the fair value of beginning balance |  |  | - |  |  |  | - |  |  |  | (241 | ) |  |  | - |
Contracts purchased during the period |  |  | 1,780 |  |  |  | 118 |  |  |  | 1,509 |  |  |  | 30 |
Ending balance of over-the-counter options |  | $ | 1,780 |  |  | $ | 118 |  |  | $ | 1,509 |  |  | $ | 30 |
As of September 24, 2011, the Partnership's outstanding commodity-related derivatives were scheduled to mature during the following 15 months, and have a weighted average maturity of approximately 4 months. As of September 25, 2010, the Partnership's outstanding commodity-related derivatives were scheduled to mature during fiscal 2011, and had a weighted average maturity of approximately 3 months. The effect of the Partnership's derivative instruments on the consolidated statement of operations for fiscal 2011, 2010 and 2009 are as follows:
|  | Amount of Gains (Losses) Recognized in OCI (Effective Portion) |  | Gains (Losses) Reclassified from Accumulated OCI into Income (Effective Portion) |
Derivatives in Cash Flow Hedging Relationships: |  |  |  | Location |  | Amount |
Fiscal 2011 |  |  |  |  |  |  |
Interest rate swap |  | $ | (1,177 | ) | Interest expense |  | $ | (2,881 | )
Fiscal 2010 |  |  |  |  |  |  |  |  |
Interest rate swap |  | $ | (5,706 | ) | Interest expense |  | $ | (3,597 | )
Fiscal 2009 |  |  |  |  |  |  |  |  |
Interest rate swap |  | $ | (4,079 | ) | Interest expense |  | $ | (3,088 | )
Derivatives Not Designated as Hedging Instruments: | Location of Gains (Losses) Recognized in Income |  | Amount of Unrealized Gains (Losses) Recognized in Income |
Fiscal 2011 |  |  |  |
Options | Cost of products sold |  | $ | (1,517 | )
Futures | Cost of products sold |  |  | 2,948 |
|  |  | $ | 1,431 |
Fiscal 2010 |  |  |  |  |
Options | Cost of products sold |  | $ | (1,275 | )
Futures | Cost of products sold |  |  | (4,125 | )
|  |  | $ | (5,400 | )
Fiscal 2009 |  |  |  |  |
Options | Cost of products sold |  | $ | (589 | )
Futures | Cost of products sold |  |  | 2,302 |
|  |  | $ | 1,713 |
Credit Risk. The Partnership's principal customers are residential and commercial end users of propane and fuel oil and refined fuels served by approximately 300 locations in 30 states. No single customer accounted for more than 10% of revenues during fiscal 2011, 2010 or 2009 and no concentration of receivables exists as of September 24, 2011 or September 25, 2010. During fiscal 2011, 2010 and 2009, three suppliers provided approximately 37%, 38% and 40%, respectively, of the Partnership's total propane supply. The Partnership believes that, if supplies from any of these three suppliers were interrupted, it would be able to secure adequate propane supplies from other sources without a material disruption of its operations. Exchange-traded futures and options contracts are traded on and guaranteed by the New York Mercantile Exchange (the “NYMEX”) and as a result, have minimal credit risk. Futures contracts traded with brokers of the NYMEX require daily cash settlements in margin accounts. The Partnership is subject to credit risk with over-the-counter option contracts entered into with various third parties to the extent the counterparties do not perform. The Partnership evaluates the financial condition of each counterparty with which it conducts business and establishes credit limits to reduce exposure to credit risk based on non-performance. The Partnership does not require collateral to support the contracts. Bank Debt and Senior Notes. The fair value of the Revolving Credit Facility approximates the carrying value since the interest rates are adjusted quarterly to reflect market conditions. Based upon quoted market prices, the fair value of the Partnership's 2020 Senior Notes was $248,500 as of September 24, 2011.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 159 -Paragraph 17-22, 27, 28 -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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