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DERIVATIVE FINANCIAL INSTRUMENTS
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12 Months Ended |
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Jan. 28, 2012
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| DERIVATIVE FINANCIAL INSTRUMENTS [Abstract] | |
| DERIVATIVE FINANCIAL INSTRUMENTS [Text Block] |
NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS
Hedging Derivatives
In 2008, the Company entered into two $75.0 million interest rate swap agreements. These interest rate swaps were used to manage the risk associated with interest rate fluctuations on a portion of the Company’s variable rate debt. Under these agreements, the Company paid interest to financial institutions at a fixed rate of 2.8%. In exchange, the financial institutions paid the Company at a variable rate, which equals the variable rate on the debt, excluding the credit spread. These swaps qualified for hedge accounting treatment and expired in March 2011.
In order to manage fluctuations in cash flows resulting from changes in diesel fuel costs, the Company entered into fuel derivative contracts with third parties. The Company hedged 3.5 million and 5.0 million gallons of diesel fuel in 2011 and 2010, respectively. These hedges represented approximately 31% and 39% of the total domestic truckload fuel needs in 2011 and 2010, respectively. The Company currently has fuel derivative contracts to hedge 2.8 million gallons of diesel fuel, or approximately 41% of the Company’s domestic truckload fuel needs from February 2012 through July 2012 and 0.5 million gallons of diesel fuel, or approximately 16% of the Company’s domestic truckload fuel needs from August 2012 through October 2012. Under these contracts, the Company pays the third party a fixed price for diesel fuel and receives variable diesel fuel prices at amounts approximating current diesel fuel costs, thereby creating the economic equivalent of a fixed-rate obligation. These derivative contracts do not qualify for hedge accounting and therefore all changes in fair value for these derivatives are included under "other income, net" on the accompanying consolidated statements of operations. The fair value of these contracts at January 28, 2012 was an asset of $0.6 million.
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