DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Jan. 26, 2013

DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 3 DERIVATIVE FINANCIAL INSTRUMENTS

Patterson is a party to certain offsetting and identical interest rate cap agreements. These cap agreements are not designated for hedge accounting treatment and were entered into to fulfill certain covenants of a sale agreement between a commercial paper conduit managed by The Bank of Tokyo-Mitsubishi UFJ, Ltd. and PDC Funding. On November 30, 2012, this agreement was amended on terms consistent with the expiring agreement. The cap agreements provide a credit enhancement feature for the financing contracts sold by PDC Funding to the commercial paper conduit.

The cap agreements are cancelled and new agreements entered into periodically to maintain consistency with the dollar maximum of the sale agreements and the maturity of the underlying financing contracts. As of January 26, 2013, PDC Funding had purchased an interest rate cap from a bank with a notional amount of $500,000 and a maturity date of December 2019. Patterson Companies, Inc. sold an identical interest rate cap to the same bank.

Similar to the above agreements, PDC Funding II, and Patterson Companies, Inc. entered into offsetting and identical interest rate cap agreements with a notional amount of $75,000 in fiscal 2012. In August 2012, these agreements were terminated and replaced with offsetting and identical interest rate cap agreements. The notional amount has remained the same and the new maturity date is July 2020.

In addition to the identical purchased and sold interest rate cap agreements described above, in May 2012 we entered into an interest rate swap agreement with a bank to economically hedge the interest rate risk associated with our finance contracts.

Our interest rate contracts do not qualify for hedge accounting treatment and, accordingly, we record the fair value of the agreements as an asset or liability and the change as income or expense during the period in which the change occurs.

The following table presents the fair value of our interest rate contracts on the consolidated balance sheets:

Derivative type	Classification	January 26, 2013		April 28, 2012		January 28, 2012
Assets:
Interest rate contracts	Other noncurrent assets	$	138	$	245	$	338
Liabilities:
Interest rate contracts	Other noncurrent liabilities	$	165	$	245	$	338

The following table presents the effect of interest rate contracts on the consolidated statements of income:

		Three Months Ended				Nine Months Ended
Derivative type	Location of gain (loss) recognized on derivative	January 26, 2013		January 28, 2012		January 26, 2013		January 28, 2012
Interest rate contracts	Other income (expense), net		($4)	$	0	$	72	$	2