Derivative Instruments and Hedging Activities

12 Months Ended

Jul. 28, 2023

Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities

5. Derivative Instruments and Hedging Activities

During the fourth quarter of 2021, in conjunction with paying down debt under the revolving credit facility, the Company terminated all of its interest rate swap agreements which resulted in the reclassification of the remaining losses from accumulated other comprehensive loss (“AOCL”) to the Consolidated Statements of Income as part of interest expense.   The determination of the amounts reclassified from AOCL to interest expense was based on the Company’s assessment that the forecasted transactions under the hedging relationships were no longer probable.

Prior to the termination of the interest rate swaps, for each of the Company’s interest rate swaps, the Company had agreed to exchange with a counterparty the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount.  The interest rates on the portion of the Company’s outstanding debt covered by its interest rate swaps were fixed at the rates specified in the interest rate swap agreements plus the Company’s credit spread. All of the Company’s interest rate swaps were accounted for as cash flow hedges.

The following table summarizes the pre-tax effects of the Company’s derivative instruments on AOCL for 2021:

	Amount of Income Recognized in AOCL on Derivatives (Effective Portion)
	2021
Cash flow hedges:
Interest rate swaps	$	27,110

The following table summarizes the pre-tax effects of the Company’s derivative instruments on income for 2021:

	Location of Loss Reclassified from  AOCL into Income (Effective Portion)	Amount of Loss Reclassified from AOCL into Income (Effective Portion)
		2021
Cash flow hedges:
Interest rate swaps	Interest expense	$	25,420

The following table summarizes the amounts reclassified out of AOCL related to the Company’s interest rate swaps for the years ended July 30, 2021:

Details about AOCL	July 30, 2021			Affected Line Item in the Consolidated Statement of Income
Loss on cash flow hedges:
Interest rate swaps	$	(25,420	)	Interest expense
Tax benefit		6,342		Provision for income taxes
	$	(19,078	)	Net of tax

No gains or losses representing amounts excluded from the assessment of effectiveness were recognized in earnings in 2021.