4. Long-Term Debt

Long-term debt is summarized as follows:

	May 31, 2012		May 26, 2011
	(in thousands, except payment data)
Mortgage notes	$	57,207	$	58,419
Senior notes		71,753		88,130
Unsecured term note due February 2025, with monthly principal and interest payments of $39,110, bearing interest at 5.75%		4,234		4,453
Revolving credit agreement		71,000		64,000
		204,194		215,002
Less current maturities		97,918		17,770
	$	106,276	$	197,232

The mortgage notes, both fixed rate and adjustable, bear interest from 1.0% to 6.1% at May 31, 2012, and mature in fiscal years 2013 through 2036. The mortgage notes are secured by the related land, buildings and equipment. Certain notes maturing in fiscal 2036 with a balance of $9,753,000 as of May 31, 2012, may be forgiven in fiscal 2013 under certain circumstances. Certain notes maturing in fiscal 2013 with a balance of $10,654,000 as of May 31, 2012, are classified as long-term debt due to an existing agreement to refinance the notes in fiscal 2013, extending the maturity date to fiscal 2043. A note maturing in fiscal 2013 with a balance of $15,093,000 as of May 31, 2012, is expected to be refinanced in fiscal 2013, at which time the note would be classified as long-term debt.

The $71,753,000 of senior notes maturing in 2013 through 2020 require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 5.89% to 6.82%, with a weighted-average fixed rate of 6.47% and 6.56% at May 31, 2012 and May 26, 2011, respectively.

The Company has the ability to issue commercial paper through an agreement with a bank, up to a maximum of $35,000,000. The agreement requires the Company to maintain unused bank lines of credit at least equal to the principal amount of outstanding commercial paper.

At May 31, 2012, the Company had a credit line totaling $175,000,000 in place. There were borrowings of $71,000,000 outstanding on the line bearing interest at LIBOR plus a margin which adjusts based on the Company’s borrowing levels, effectively 1.05% at May 31, 2012. This agreement matures in April 2013 and requires an annual facility fee of 0.20% on the total commitment. Based on borrowings and commercial paper outstanding, availability under the line at May 31, 2012, totaled $104,000,000. It is the Company’s intent to refinance this agreement in fiscal 2013 at which time these borrowings would be classified as long-term debt.

The Company’s loan agreements include, among other covenants, maintenance of certain financial ratios, including a debt-to-capitalization ratio and a fixed charge coverage ratio. The Company is in compliance with all debt covenants at May 31, 2012.

Scheduled annual principal payments on long-term debt for the years subsequent to May 31, 2012, are:

Fiscal Year	(in thousands)

2013	$	97,918
2014		8,036
2015		23,314
2016		11,631
2017		11,654
Thereafter		51,641
	$	204,194

Interest paid, net of amounts capitalized, in fiscal 2012, 2011, and 2010 totaled $9,177,000, $10,221,000, and $11,181,000, respectively.

The Company utilizes derivatives principally to manage market risks and reduce its exposure resulting from fluctuations in interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions.

From February 1, 2008 through February 1, 2011, the Company had an interest rate swap agreement covering $25,170,000 of floating rate debt, which required the Company to pay interest at a defined rate of 3.24% while receiving interest at a defined variable rate of one-month LIBOR. The Company recognizes derivatives as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Derivatives that do not qualify for hedge accounting must be adjusted to fair value through earnings. The Company’s interest rate swap agreement was considered effective and qualified as a cash flow hedge. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. In fiscal 2011, the interest rate swap was considered effective and had no effect on earnings. The increase in fair value of the interest rate swap of $488,000 ($293,000 net of tax), and $474,000 ($292,000 net of tax), was included in other comprehensive loss in fiscal 2011 and 2010, respectively. The notional amount of the swap was $25,170,000 throughout the life of the swap.

On February 29, 2008, the Company also entered into an interest rate swap agreement covering $25,000,000 of floating rate debt, which required the Company to pay interest at a defined rate of 3.49% while receiving interest at a defined variable rate of three-month LIBOR. The interest rate swap agreement was considered effective and qualified as a cash flow hedge. On March 19, 2008, the Company terminated the swap, at which time cash flow hedge accounting ceased. The fair value of the swap on the date of termination was a liability of $567,000 ($338,000 net of tax). In fiscal 2012, 2011 and 2010, the Company reclassified $113,000 ($68,000 net of tax) from accumulated other comprehensive loss to interest expense. The remaining loss at May 31, 2012, in accumulated other comprehensive loss will be reclassified into earnings as interest expense through April 15, 2013, the remaining life of the original hedge. The Company expects to reclassify approximately $99,000 ($58,000 net of tax) of loss into earnings in fiscal 2013.