FAIR VALUE MEASUREMENTS

12 Months Ended

Aug. 03, 2019

NOTE 8—FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

Recurring Fair Value Measurements

The following table provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis as of August 3, 2019 and July 28, 2018:



		Fair Value at August 3, 2019
(In thousands)	Consolidated Balance Sheets Location	Level 1		Level 2		Level 3
Assets:
Interest rate swaps designated as hedging instruments	Prepaid expenses and other current assets	$	—	$	389	$	—
Mutual funds	Prepaid expenses and other current assets	$	7	$	—	$	—
Interest rate swaps designated as hedging instruments	Other assets	$	—	$	145	$	—
Mutual funds	Other assets	$	1,799	$	—	$	—

Liabilities:
Interest rate swaps designated as hedging instruments	Accrued expenses and other current liabilities	$	—	$	16,360	$	—
Interest rate swaps designated as hedging instruments	Other long-term liabilities	$	—	$	60,737	$	—



		Fair Value at July 28, 2018
(In thousands)	Consolidated Balance Sheets Location	Level 1		Level 2		Level 3
Assets:
Interest rate swaps designated as hedging instruments	Prepaid expenses and other current assets	$	—	$	1,459	$	—
Interest rate swaps designated as hedging instruments	Other assets	$	—	$	5,860	$	—

Interest Rate Swap Contracts

The fair values of interest rate swap contracts are measured using Level 2 inputs. The interest rate swap contracts are valued using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates, LIBOR swap rates and credit default swap rates. As of August 3, 2019, a 100 basis point increase in forward LIBOR interest rates would increase the fair value of the interest rate swaps by approximately $69.7 million; a 100 basis point decrease in forward LIBOR interest rates would decrease the fair value of the interest rate swaps by approximately $73.0 million. Refer to Note 9—Derivatives for further information on interest rate swap contracts.

Mutual Funds

Mutual fund assets consist of balances held in investments to fund certain deferred compensation plans. The fair values of mutual fund assets are based on quoted market prices of the mutual funds held by the plan at each reporting period. Mutual funds traded in active markets are classified within Level 1 of the fair value hierarchy.

Fair Value Estimates

For certain of the Company’s financial instruments including cash and cash equivalents, receivables, accounts payable, accrued vacation, compensation and benefits, and other current assets and liabilities the fair values approximate carrying amounts due to their short maturities.

Notes receivable estimated fair value is determined by a discounted cash flow approach applying a market rate for similar instruments that is determined using Level 3 inputs. Refer to Note 1—Significant Accounting Policies for additional information regarding the fair value hierarchy.

The estimated fair value of our long-term debt was $176.2 million less than the carrying value as of August 3, 2019. There was no difference in the estimated fair value and carrying value of our long-term debt as of July 28, 2018. The estimated fair values are based on market quotes, where available, or market values for similar instruments, using Level 2 and 3 inputs. In the table below, the carrying value of our long-term debt is net of original issue discounts and debt issuance costs.



	August 3, 2019				July 28, 2018
(in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Notes receivable, including current portion	$	46,320	$	45,232	$	1,930	$	1,930
Long-term debt, including current portion	$	2,906,483	$	2,730,271	$	320,000	$	320,000

Fuel Supply Agreements and Derivatives

To reduce diesel price risk, we have in the past, and may in the future, periodically enter in to derivative financial instruments and/or forward purchase commitments for a portion of our projected monthly diesel fuel requirements at fixed prices. During the fiscal years ended August 3, 2019 and July 28, 2018, the Company did not enter into any such agreements or derivatives.

Foreign Exchange Derivatives

To reduce foreign exchange risk, we have in the past, and may in the future, periodically enter in to derivative financial instruments for a portion of our projected monthly foreign currency requirements at fixed prices. As of August 3, 2019 and July 28, 2018, our outstanding foreign currency forward contracts were immaterial.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details