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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK LONG-TERM DEBT OBLIGATIONS The following summary of our long-term debt obligations includes: • scheduled principal repayments for the next five years and after; • weighted average interest rates for debt maturing in each of the next five years and after; and • estimated fair values of outstanding obligations. The fair value of long-term debt is estimated based on quoted market prices for the same or similar issues or on the discounted value of the future cash flows expected to be paid using incremental rates of borrowing for similar liabilities. Changes in market rates of interest affect the fair value of our fixed-rate debt. SUMMARY OF LONG-TERM DEBT OBLIGATIONS AS OF DECEMBER 30, 2007  (Click to view entire chart) OUR USE OF DERIVATIVES We occasionally use derivatives to: • achieve the mix of variable-rate debt and fixed-rate debt that we want in our capital structure; • hedge commitments in commodities that we produce or buy; and • manage our exposure to foreign exchange rate fluctuations The fair value of our derivatives may vary due to the volatility of the underlying forward prices or index rates associated with them. COMMODITY FUTURES, SWAPS AND COLLARS As of December 30, 2007, we had commodity futures, swaps and collars with an: • average annual notional value of $100 million; • aggregate notional value of $114 million; and • aggregate fair value of $7 million. The commodity swaps with notional values of $114 million were accounted for as follows: • $105 million were cash flow hedges; and • $9 million were not designated as hedges. The changes in the fair market value of the commodity swaps not designated as hedges were recognized in earnings during the period in which the change occurred. A 10 percent change in forward price levels would change the fair value of our commodity swaps by approximately $11 million. That excludes any offsetting effect of price changes on underlying physical product purchases or sales. |