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Long-Term Debt
6 Months Ended
Nov. 29, 2012
Debt Disclosure [Abstract]  
Long-Term Debt

3. Long-Term Debt

 

The $75,000,000 balance of the Company’s existing credit facility is classified as long-term debt as of November 29, 2012 due to commitments received from the bank group to replace the existing facility with a new five-year, $225,000,000 credit agreement. The new credit agreement will include a $50,000,000 five-year term loan and a $175,000,000 revolving credit facility.

 

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.

 

On February 29, 2008, the Company 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). For each of the 13 weeks and 26 weeks ended November 29, 2012 and November 24, 2011, the Company reclassified $28,000 ($17,000 net of tax) and $57,000 ($34,000 net of tax), respectively, from accumulated other comprehensive loss to interest expense. The remaining loss at November 29, 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 $43,000 ($24,000 net of tax) of additional loss into earnings through April 15, 2013.