v3.22.2.2
Derivative Instruments and Hedging Activities
 12 Months Ended
Jul. 29, 2022
Derivative Instruments and Hedging Activities [Abstract]  
Derivative Instruments and Hedging Activities
6. 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 (Loss) 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 and 2020:

 
  
Amount of Income (Loss) Recognized in AOCL
on Derivatives (Effective Portion)
  
 
  
2021
    
2020
  
Cash flow hedges:
            
Interest rate swaps
  
$
27,110
    
$
(17,740
)


The following table summarizes the changes in AOCL, net of tax, related to the Company’s interest rate swaps for the years ended July 30, 2021 and July 31, 2020:

 
  
July 30,
2021
    
July 31,
2020
  
Beginning AOCL balance
  
$
(20,346
)
  
$
(6,913
)
 
                
Other comprehensive income (loss) before reclassifications
    
39,424
      
(12,559
)
Amounts reclassified from AOCL into earnings
    
(19,078
)
    
(874
)
Other comprehensive income (loss), net of tax
    
20,346
      
(13,433
)
Ending AOCL balance
  
$
—
    
$
(20,346
)


The following table summarizes the pre-tax effects of the Company’s derivative instruments on income for 2021 and 2020:
Location of Loss Reclassified from
 AOCL into Income (Effective Portion)
  
Amount of Loss Reclassified from
AOCL into Income (Effective Portion)
  
 
 
  
2021
    
2020
  
Cash flow hedges:
 
            
Interest rate swaps
Interest expense
  
$
25,420
    
$
1,165
  


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 and July 31, 2020:

 
            
Affected Line Item in
the Consolidated
Details about AOCL
  
July 30, 2021
    
July 31, 2020
  
Statement of Income
Loss on cash flow hedges:
            
         
Interest rate swaps
  
$
(25,420
)
  
$
(1,165
)
Interest expense
Tax benefit
    
6,342
      
291
  
Provision for income taxes
 
  
$
(19,078
)
  
$
(874
)
Net of tax
 

No gains or losses representing amounts excluded from the assessment of effectiveness were recognized in earnings in 2021 and 2020.