DERIVATIVES AND HEDGING

12 Months Ended

Jul. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At times, the Company uses interest rate swap agreements, foreign currency forward contracts and certain non-derivative financial instruments to help manage its risks associated with foreign currency exchange rates and interest rates. The Company records derivatives as assets and liabilities on the balance sheet at fair value. Changes in the fair value of derivative instruments are recognized in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the Consolidated Statements of Cash Flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued.

Certain of the Company’s derivative transactions were subject to master netting arrangements that allow the Company to net settle contracts with the same counterparties. These arrangements generally do not call for collateral and as of the applicable dates presented below, no cash collateral had been received or pledged related to the underlying derivatives.

As of July 31, 2023 there were not any derivative instruments designated as cash flow hedges. As of July 31, 2022, the fair value of our derivative instruments designated as cash flow hedges, and the associated notional amounts, presented on a pre-tax basis, were as follows:


	July 31, 2022
Cash Flow Hedges		Notional		Fair Value in Other Current Assets		Fair Value in Other Current Liabilities
Foreign currency forward contracts		$	33,997	$	—	$	80
Interest rate swap agreements		273,325		850		—
Total derivative financial instruments		$	307,322	$	850	$	80

The Company previously held interest rate swaps to convert a portion of the Company’s long-term debt from floating rate to fixed rate debt to partially hedge the interest rate risk related to the Company’s U.S. dollar term loan tranche that matures in February 2026.

Foreign currency forward contracts outstanding at July 31, 2022 were used to exchange British Pounds Sterling for Euro. Effective August 1, 2022, the Company's foreign currency forward contracts were no longer designated as cash flow hedges.

Net Investment Hedges

The Company designates a portion of its outstanding Euro-denominated term loan tranche as a hedge of foreign currency exposures related to investments the Company has in certain Euro-denominated functional currency subsidiaries.

The foreign currency transaction gains and losses on the Euro-denominated portion of the term loan, which is designated and effective as a hedge of the Company’s net investment in its Euro-denominated functional currency subsidiaries, are included as a component of the foreign currency translation adjustment. Gains (losses), net of tax, included in the foreign currency translation adjustment were $(27,211), $62,244, and $(1,943) for the fiscal years ended July 31, 2023, July 31, 2022 and July 31, 2021, respectively.

There were no amounts reclassified out of accumulated other comprehensive income (“AOCI”) pertaining to the net investment hedge during the fiscal years ended July 31, 2023, 2022 and 2021.

Derivatives Not Designated as Hedging Instruments

The Company has certain other derivative instruments which have not been designated as hedges. These other derivative instruments had a notional amount totaling approximately $25,248 and a fair value liability of $932 as of July 31, 2023. These other derivative instruments had a notional amount totaling approximately $25,628 and a fair value liability of $1,077 as of July 31, 2022. For these derivative instruments, changes in fair value are recognized in earnings.

The total amounts presented in the Consolidated Statements of Income and Comprehensive Income due to changes in the fair value of the following derivative instruments for the fiscal years ended July 31, 2023, 2022 and 2021 are as follows:


	2023		2022		2021
Gain (Loss) on Derivatives Designated as Cash Flow Hedges
Gain (loss) recognized in Other comprehensive income (loss), net of tax
Foreign currency forward contracts	$	—	$	6	$	(63)
Interest rate swap agreements (1)	(675)		9,324		10,231
Total gain (loss)	$	(675)	$	9,330	$	10,168

(1)Other comprehensive income (loss), net of tax, before reclassification from AOCI was $702, $3,626 and $340 for fiscal years 2023, 2022 and 2021, respectively.


	2023
	Sales		Interest Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	$	(58)	$	—
Interest rate swap agreements	—		1,377
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Amount of gain (loss) recognized in income, net of tax
Foreign currency forward contracts	2,742		—
Commodities swap agreements	(2,229)		—
Interest rate swap agreements	—		167
Total gain (loss)	$	455	$	1,544


	2022
	Sales		Interest Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	$	(723)	$	—
Interest rate swap agreements	—		(5,698)
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Amount of gain (loss) recognized in income, net of tax

Interest rate swap agreements	—		428
Total gain (loss)	$	(723)	$	(5,270)


	2021
	Sales		Interest Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	$	(1,050)	$	—
Interest rate swap agreements	—		(9,891)
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Amount of gain (loss) recognized in income, net of tax

Interest rate swap agreements	—		(85)
Total gain (loss)	$	(1,050)	$	(9,976)