LONG-TERM DEBT

During the fiscal year ended July 28, 2012, the Company entered into a lease agreement for a new distribution facility in Aurora, Colorado. As of the fiscal year ended August 3, 2013, actual construction costs exceeded the construction allowance as defined by the lease agreement, and therefore, the Company determined it met the criteria for continuing involvement pursuant to ASC 840, Leases, and applied the financing method to account for this transaction. Under the financing method, the book value of the distribution facility and related accumulated depreciation remains on the balance sheet. The construction allowance is recorded as a financing obligation in long-term debt. A portion of each lease payment will reduce the amount of the financing obligation, and a portion will be recorded as interest expense at an effective rate of approximately 7.32%.

As of August 2, 2014 and August 3, 2013, the Company's long-term debt consisted of the following:



	August 2, 2014		August 3, 2013
	(In thousands)
Financing obligation, due monthly, and maturing in October 2028 at an effective interest rate of 7.32%	$	33,439	$	33,477
Real estate and equipment term loans payable to bank, secured by building and other assets, due monthly and maturing in June 2015, at an interest rate of 8.60%	—		409
Term loan for employee stock ownership plan, secured by common stock of the Company, due monthly and maturing in May 2015, at an interest rate of 1.33%	61		224
	$	33,500	$	34,110
Less: current installments	990		1,019
Long-term debt, excluding current installments	$	32,510	$	33,091

Aggregate maturities of long-term debt for the next five years and thereafter are as follows at August 2, 2014:



Year	(In thousands)
2015	$	990
2016	1,000
2017	1,141
2018	1,250
2019	1,306
2020 and thereafter	27,813
	$	33,500