DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Oct. 25, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 4 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 25, 2014, 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 October 25, 2014, PDC Funding had purchased an interest rate cap from a bank with a notional amount of $500,000 and a maturity date of February 2022. 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 $100,000 in fiscal 2014. In August 2014, these agreements were terminated and replaced with offsetting and identical interest rate cap agreements. The notional amount remained at $100,000 and the new maturity date is October 2022.

In addition to the purchased and sold identical 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 a portion of the finance contracts we had sold through the special purpose entities.

These 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.

In January 2014 we entered into a forward interest rate swap agreement with a notional amount of $250,000 and accounted for as cash flow hedge, to hedge interest rate fluctuations in anticipation of refinancing the 5.17% senior notes due March 25, 2015 with a long-term loan for $250,000 and a term of ten years.

The following presents the fair value of interest rate contracts included in the consolidated balance sheets:

			October 25,		April 26,		October 26,
Derivative type	Classification		2014		2014		2013
Assets:
Interest rate contracts		Other noncurrent assets	$	963	$	1,716	$	810
Liabilities:
Interest rate contracts		Other noncurrent liabilities	$	964	$	1,720	$	820
Interest rate swaps		Other current liabilities	$	18,874	$	5,660	$	0

The following table presents the effect of interest rate contracts on the consolidated statements of income and comprehensive income (net of tax):

		Three Months Ended						Six Months Ended
	Location of gain (loss)	October 25,			October 26,			October 25,			October 26,
Derivative type	recognized on derivative	2014			2013			2014			2013
Interest rate contracts	Other income (expense), net	$	0		$	2		$	0		$	2
Interest rate swaps	Other comprehensive income	($	3,867	)	($	48	)	($	6,176	)	($	97	)