Derivative Instruments and Hedging Activities

9 Months Ended

May 28, 2011

Notes To Financial Statements [Abstract]

Derivative Instruments and Hedging Activities

5. Derivative Instruments and Hedging Activities

In January 2008, the Company entered into an interest rate swap agreement to manage its exposure to interest rate movements and the related effect on its variable rate debt. The Company concluded that the interest rate swap met the criteria to qualify as a cash flow hedge under US GAAP. Accordingly, the Company reflected all changes in the fair value of the swap agreement in accumulated other comprehensive income, a component of shareholders' equity. The swap agreement, with a notional amount of $100.0 million, matured on March 14, 2011. The Company paid a fixed rate of 3.51% and received a variable rate tied to the three month LIBOR rate.

As of May 28, 2011, there were no fair value amounts recorded by the Company related to this agreement as it matured on March 14, 2011.  As of August 28, 2010, the Company had recorded the fair value of the interest rate swap of $1.6 million in accrued liabilities and a corresponding loss of $1.0 million in accumulated other comprehensive income, which was net of the associated tax benefit.

The Company recorded any realized gains or losses from its interest rate swap as an adjustment to interest expense in its Consolidated Statements of Income.  For the thirteen weeks ended May 28, 2011 and May 29, 2010, the Company reclassified a loss from accumulated other comprehensive income into interest expense totaling $0.1 million and $0.8 million, respectively. For the thirty-nine weeks ended May 28, 2011 and May 29, 2010, the Company reclassified a loss from accumulated other comprehensive income into interest expense totaling $1.8 million and $2.4 million, respectively.