Derivative Instruments

6 Months Ended

Apr. 16, 2017

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. In April 2014, to reduce our exposure to rising interest rates, we entered into nine forward-starting interest rate swap agreements that effectively converted $300.0 million of our variable rate borrowings to a fixed-rate basis from October 2014 through October 2018. Additionally, in June 2015, we entered into eleven forward-starting interest rate swap agreements that effectively converted an additional $200.0 million of our variable rate borrowings to a fixed rate from October 2015 through October 2018, and $500.0 million from October 2018 through October 2022.

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 other comprehensive income (“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 variable rate debt.

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

	Balance Sheet Location	Fair Value
		April 16, 2017			October 2, 2016
Derivatives designated as cash flow hedging instruments:
Interest rate swaps	Accrued liabilities	$	(3,652	)	$	(5,857	)
Interest rate swaps	Other long-term liabilities	(21,723		)	(41,908		)
Total derivatives (Note 4)		$	(25,375	)	$	(47,765	)

Financial performance — The following table summarizes the OCI activity related to our interest rate swap derivative instruments (in thousands):

	Location of Loss in Income	Quarter						Year-to-date
		April 16, 2017			April 10, 2016			April 16, 2017		April 10, 2016
(Loss) gain recognized in OCI	N/A	$	(3,981	)	$	(8,746	)	$	19,105	$	(20,183	)
Loss reclassified from accumulated OCI into net earnings	Interest expense, net	$	1,219		$	876		$	3,285	$	2,320

Amounts reclassified from accumulated OCI into interest expense represent payments made to the counterparties for the effective portions of the interest rate swaps. During the periods presented, our interest rate swaps had no hedge ineffectiveness.