Derivative Instruments and Hedging Activities

12 Months Ended

Aug. 01, 2014

Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities

6.  Derivative Instruments and Hedging Activities

For each of the Company's interest rate swaps, the Company has agreed to exchange with a counterparty the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount.  The interest rates on the portion of the Company's outstanding debt covered by its interest rate swaps is fixed at the rates in the table below plus the Company's credit spread.  The Company's credit spread at August 1, 2014 and August 2, 2013 was 1.50%.  All of the Company's interest rate swaps are accounted for as cash flow hedges.

A summary of the Company's interest rate swaps at August 1, 2014 is as follows:

Trade Date	Effective Date	Term (in Years)		Notional Amount		Fixed Rate
August 10, 2010	May 3, 2013		2	$	200,000		2.73	%
July 25, 2011	May 3, 2013		2		50,000		2.00	%
July 25, 2011	May 3, 2013		3		50,000		2.45	%
September 19, 2011	May 3, 2013		2		25,000		1.05	%
September 19, 2011	May 3, 2013		2		25,000		1.05	%
December 7, 2011	May 3, 2013		3		50,000		1.40	%
March 18, 2013	May 3, 2015		3		50,000		1.51	%
April 8, 2013	May 3, 2015		2		50,000		1.05	%
April 15, 2013	May 3, 2015		2		50,000		1.03	%
April 22, 2013	May 3, 2015		3		25,000		1.30	%
April 25, 2013	May 3, 2015		3		25,000		1.29	%
June 18, 2014	May 3, 2015		4		40,000		2.51	%
June 24, 2014	May 3, 2015		4		30,000		2.51	%
July 1, 2014	May 5, 2015		4		30,000		2.43	%

The notional amount for the interest rate swap entered into on June 18, 2014 increases by $40,000 each May over the four-year term of the interest rate swap beginning in May 2016 until the notional amount reaches $160,000 in May 2018.  The notional amounts for the interest rate swaps entered into on June 24, 2014 and July 1, 2014 increase by $30,000 each May over the four-year terms of the interest rate swaps beginning in May 2016 until the notional amounts each reach $120,000 in May 2018.

The estimated fair values of the Company's derivative instruments were as follows:

(See Note 3)	Balance Sheet Location	August 1, 2014		August 2, 2013
Interest rate swaps	Other assets	$	240	$	883
Interest rate swaps	Current interest rate swap liability	$	4,704	$	--
Interest rate swaps	Long-term interest rate swap liability		3,239		11,644
Total liabilities		$	7,943	$	11,644

The following table summarizes the offsetting of the Company's derivative assets in the Consolidated Balance Sheets at August 1, 2014 and August 2, 2013:

	Gross Asset Amounts				Liability Amount Offset					Net Asset Amount Presented in the Balance Sheets
(See Note 3)	August 1, 2014		August 2, 2013		August 1, 2014		August 2, 2013			August 1, 2014		August 2, 2013
Interest rate swaps	$	240	$	1,159	$	--	$	(276	)	$	240	$	883

The following table summarizes the offsetting of the Company’s derivative liabilities in the Consolidated Balance Sheets at August 1, 2014 and August 2, 2013:

	Gross Liability Amounts				Asset Amount Offset						Net Liability Amount Presented in the Balance Sheets
(See Note 3)	August 1, 2014		August 2, 2013		August 1, 2014			August 2, 2013			August 1, 2014		August 2, 2013
Interest rate swaps	$	8,441	$	13,120	$	(498	)	$	(1,476	)	$	7,943	$	11,644

The estimated fair values of the Company's interest rate swap assets and liabilities incorporate the Company's non-performance risk.  The adjustment related to the Company's non-performance risk at August 1, 2014 and August 2, 2013 resulted in reductions of $62 and $123, respectively, in the total fair value of the interest rate swap asset and liabilities.  The offset to the interest rate swap assets and liabilities is recorded in accumulated other comprehensive loss ("AOCL"), net of the deferred tax assets, and will be reclassified into earnings over the term of the underlying debt.  As of August 1, 2014, the estimated pre-tax portion of AOCL that is expected to be reclassified into earnings over the next twelve months is $6,014.  Cash flows related to the interest rate swaps are included in interest expense and in operating activities.

The following table summarizes the pre-tax effects of the Company's derivative instruments on AOCL for each of the three years:

	Amount of Income Recognized in AOCL on Derivatives (Effective Portion)
	2014		2013		2012
Cash flow hedges:
Interest rate swaps	$	3,058	$	23,620	$	17,223

The following table summarizes the changes in AOCL, net of tax, related to the Company's interest rate swaps for the year ended August 1, 2014:

AOCL balance at August 2, 2013	$	(6,612	)
Other comprehensive income before reclassifications		6,836
Amounts reclassified from AOCL into earnings		(4,957	)
Other comprehensive income, net of tax		1,879
AOCL balance at August 1, 2014	$	(4,733	)

The following table summarizes the pre-tax effects of the Company's derivative instruments on income for each of the three years:

Location of Loss Reclassified from AOCL into Income (Effective Portion)		Amount of Loss Reclassified from AOCL into Income (Effective Portion)
		2014		2013		2012
Cash flow hedges:
Interest rate swaps	Interest expense	$	8,068	$	20,773	$	35,903

The following table summarizes the amounts reclassified out of AOCL related to the Company's interest rate swaps for the year ended August 1, 2014:

				Affected Line Item in the
Details about AOCL				Consolidated Statement of Income
Loss on cash flow hedges:
Interest rate swaps	$	(8,068	)	Interest expense
Tax benefit		3,111		Provision for income taxes
	$	(4,957	)	Net of tax

Any portion of the fair value of the interest rate swaps determined to be ineffective will be recognized currently in earnings.  No ineffectiveness has been recorded in 2014, 2013 and 2012.