Interest Rate Derivatives

9 Months Ended

Jan. 22, 2012

Interest Rate Derivatives

Interest Rate Derivatives

8.   Interest Rate Derivatives

We have entered into various interest rate derivative agreements in order to manage market risk on variable rate term loans outstanding. We have an interest rate swap agreement with an aggregate notional value of $50,000 with a maturity date in fiscal 2014. We have also entered into interest rate cap contracts with an aggregate notional value of $200,000 having maturity dates in fiscal 2012 and 2013 and paid premiums of $203 at inception.

The fair values of derivatives included in our consolidated balance sheet are as follows:

Type of Derivative Instrument	Balance Sheet Location	January 22, 2012		April 24, 2011
Interest rate cap contracts	Prepaid deposits and other	$	—	$	29
Interest rate swap contracts	Accrued interest	—		1,439
Interest rate swap contracts	Other long-term liabilities	2,917		3,594

The interest rate cap agreements meet the criteria for hedge accounting for cash flow hedges and have been evaluated, as of January 22, 2012, as being fully effective. As a result, there is no impact on our consolidated statement of operations from changes in fair value of the interest rate cap agreements. The loss recorded in other comprehensive income (loss) for our interest rate cap agreements is recorded net of deferred income tax benefits of $13 and $49 as of January 22, 2012 and April 24, 2011, respectively. The change in unrealized loss on our derivatives qualifying for hedge accounting was $3 and $29 for the three and nine months ended January 22, 2012, respectively.  The change in unrealized gain (loss) on our derivatives qualifying for hedge accounting was $63 and $67 for the three and nine months ended January 23, 2011, respectively.

Our interest rate swaps no longer meet the criteria for hedge effectiveness, and therefore changes in the fair value of the swaps subsequent to the date of ineffectiveness in February 2010, are recorded in derivative income (expense) in the consolidated statement of operations. The cumulative loss recorded in other comprehensive income (loss) through the date of ineffectiveness is being amortized into derivative expense over the remaining term of the individual interest rate swap agreements or when the underlying transaction is no longer expected to occur. As of January 22, 2012, the weighted average fixed LIBOR interest rate of our interest rate swap agreement was 3.995%.

The loss recorded in other comprehensive income (loss) of our interest rate swap agreements is recorded net of deferred income tax benefits of $595 and $1,295, as of January 22, 2012 and April 24, 2011, respectively.

Derivative income (expense) related to the change in fair value of interest rate swap contracts is as follows:

	Three Months Ended				Nine Months Ended
	January 22,		January 23,		January 22,		January 23,
	2012		2011		2012		2011
Derivative income (expense)	$	749	$	2,344	$	2,116	$	7,207

Derivative income (expense) realized associated with the amortization of cumulative loss recorded in other comprehensive income (loss) for the interest rate swaps through the date of ineffectiveness is as follows:

	Three Months Ended						Nine Months Ended
	January 22,			January 23,			January 22,			January 23,
	2012			2011			2012			2011
Accumulated OCI amortization	$	328		$	858		$	1,164		$	5,299
Change in deferred taxes	198			512			700			3,164
Derivative income (expense)	(526		)	(1,370		)	(1,864		)	(8,463		)

The amount of accumulated other comprehensive income (loss) related to interest rate swap contracts and interest rate cap contracts maturing within the next twelve months was $616, net of tax of $371, as of January 22, 2012.