Derivative Instruments

12 Months Ended

Sep. 28, 2014

Derivative Instruments and Hedges, Assets [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

Objectives and strategies — We are exposed to interest rate volatility with regard to our variable rate debt. To reduce our exposure to rising interest rates, in August 2010, we entered into two interest rate swap agreements that effectively converted $100.0 million of our variable rate term loan borrowings to a fixed-rate basis from September 2011 through September 2014. Additionally, in April 2014, we entered into nine forward-starting interest rate swap agreements that effectively convert $300.0 million of our variable rate borrowings to a fixed rate basis from October 2014 through October 2018. These agreements have been designated as cash flow hedges under the terms of the FASB authoritative guidance for derivatives and hedging. To the extent that they are effective in offsetting the variability of the hedged cash flows, changes in the fair values of the derivatives are not included in earnings but are included in OCI. These changes in fair value are subsequently reclassified into net earnings as a component of interest expense as the hedged interest payments are made on our term debt.

Financial position — The following derivative instruments were outstanding as of the end of each fiscal year (in thousands):

	September 28, 2014				September 29, 2013
	Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate swaps (Note 5)	Accrued liabilities	$	(1,789	)	Accrued liabilities	$	(1,190	)
Total derivatives		$	(1,789	)		$	(1,190	)

Financial performance — The following is a summary of the accumulated OCI activity related to our interest rate swap derivative instruments (in thousands):

	Location of Loss in Income	2014			2013			2012
Loss recognized in OCI	N/A	$	(1,890	)	$	(110	)	$	(1,055	)
Loss reclassified from accumulated OCI into net earnings	Interest expense, net	$	(1,291	)	$	(1,353	)	$	(1,304	)

Amounts reclassified from accumulated OCI into interest expense represent payments made to the counterparty for the effective portions of the interest rate swaps. During 2014, 2013 and 2012, our interest rate swaps had no hedge ineffectiveness.