Interest Rate Derivatives

9 Months Ended

Jan. 27, 2013

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. At January 27, 2013, we have an interest rate swap agreement with an aggregate notional value of $50,000 with a maturity date in September 2013. Previously we had additionally entered into interest rate cap contracts, which matured prior to January 27, 2013.

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

Type of Derivative Instrument	Balance Sheet Location	January 27, 2013		April 29, 2012
Interest rate swap contracts	Accrued interest	$	1,248	$	—
Interest rate swap contracts	Other long-term liabilities	—		2,493

The interest rate cap agreements met the criteria for hedge accounting for cash flow hedges. As a result, there was 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 a deferred income tax benefit of $8 as of April 29, 2012. The change in unrealized loss on our derivatives qualifying for hedge accounting was an immaterial amount for the three and nine months ended January 27, 2013.  The change in unrealized loss on our derivatives qualifying for hedge accounting was $0 and $26 for the three and nine months ended January 22, 2012, 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 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 27, 2013, 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 $238 and $506, as of January 27, 2013 and April 29, 2012, respectively.

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

	Three Months Ended				Nine Months Ended
	January 27,		January 22,		January 27,		January 22,
	2013		2012		2013		2012
Derivative income	$	460	$	749	$	1,245	$	2,116

Derivative 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 27,			January 22,			January 27,			January 22,
	2013			2012			2013			2012
Accumulated OCI amortization	$	148		$	328		$	445		$	1,164
Change in deferred taxes	90			198			268			700
Derivative income (expense)	(238		)	(526		)	(713		)	(1,864		)

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 $396, net of tax of $238, as of January 27, 2013.