DERIVATIVES

12 Months Ended

Aug. 01, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

NOTE 9—DERIVATIVES

Management of Interest Rate Risk

The Company enters into interest rate swap contracts from time to time to mitigate its exposure to changes in market interest rates as part of its overall strategy to manage its debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates. Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. The Company’s interest rate swap contracts are designated as cash flow hedges at August 1, 2020. Interest rate swap contracts are reflected at their fair values in the Consolidated Balance Sheets. Refer to Note 8—Fair Value Measurements of Financial Instruments for further information on the fair value of interest rate swap contracts.

Details of outstanding swap contracts as of August 1, 2020, which are all pay fixed and receive floating, are as follows:



Effective Date	Swap Maturity	Outstanding Notional Value (in millions)		Pay Fixed Rate		Receive Floating Rate⁽⁷⁾	Floating Rate Reset Terms
October 26, 2018	October 31, 2020	$	100.0	2.8240	%	One-Month LIBOR	Monthly
June 9, 2016	April 29, 2021	25.0		1.0650	%	One-Month LIBOR	Monthly
June 24, 2016	April 29, 2021	25.0		0.9260	%	One-Month LIBOR	Monthly
January 23, 2019	April 29, 2021	50.0		2.5500	%	One-Month LIBOR	Monthly
April 2, 2019	June 30, 2021	100.0		2.2520	%	One-Month LIBOR	Monthly
June 10, 2019	June 30, 2021	50.0		2.2290	%	One-Month LIBOR	Monthly
November 30, 2018	October 29, 2021	100.0		2.8084	%	One-Month LIBOR	Monthly
March 21, 2019	April 15, 2022	100.0		2.3645	%	One-Month LIBOR	Monthly
April 2, 2019	June 30, 2022	100.0		2.2170	%	One-Month LIBOR	Monthly
June 28, 2019	June 30, 2022	50.0		2.1840	%	One-Month LIBOR	Monthly
August 3, 2015⁽¹⁾	August 15, 2022	55.5		1.7950	%	One-Month LIBOR	Monthly
August 3, 2015⁽²⁾	August 15, 2022	37.0		1.7950	%	One-Month LIBOR	Monthly
October 26, 2018	October 31, 2022	100.0		2.8915	%	One-Month LIBOR	Monthly
January 11, 2019	October 31, 2022	50.0		2.4678	%	One-Month LIBOR	Monthly
January 23, 2019	October 31, 2022	50.0		2.5255	%	One-Month LIBOR	Monthly
October 30, 2020⁽³⁾	October 31, 2022	—		0.4540	%	One-Month LIBOR	Monthly
November 16, 2018	March 31, 2023	150.0		2.8950	%	One-Month LIBOR	Monthly
January 23, 2019	March 31, 2023	50.0		2.5292	%	One-Month LIBOR	Monthly
April 29, 2021⁽⁴⁾	April 28, 2023	—		0.5680	%	One-Month LIBOR	Monthly
June 30, 2021⁽⁵⁾	June 30, 2023	—		0.6070	%	One-Month LIBOR	Monthly
November 30, 2018	September 30, 2023	50.0		2.8315	%	One-Month LIBOR	Monthly
October 29, 2021⁽⁶⁾	October 20, 2023	—		0.6810	%	One-Month LIBOR	Monthly
October 26, 2018	October 31, 2023	100.0		2.9210	%	One-Month LIBOR	Monthly
January 11, 2019	March 28, 2024	100.0		2.4770	%	One-Month LIBOR	Monthly
January 23, 2019	March 28, 2024	100.0		2.5420	%	One-Month LIBOR	Monthly
November 30, 2018	October 31, 2024	100.0		2.8480	%	One-Month LIBOR	Monthly
January 11, 2019	October 31, 2024	100.0		2.5010	%	One-Month LIBOR	Monthly
January 24, 2019	October 31, 2024	50.0		2.5210	%	One-Month LIBOR	Monthly
October 26, 2018	October 22, 2025	50.0		2.9550	%	One-Month LIBOR	Monthly
November 16, 2018	October 22, 2025	50.0		2.9580	%	One-Month LIBOR	Monthly
November 16, 2018	October 22, 2025	50.0		2.9590	%	One-Month LIBOR	Monthly
January 24, 2019	October 22, 2025	50.0		2.5558	%	One-Month LIBOR	Monthly
		$	1,992.5


(1)	On March 31, 2015, the Company amended the original contract to reduce the beginning notional principal amount from $140 million to $84 million. The swap contract has an amortizing notional principal amount which is reduced by $1.5 million on a quarterly basis.


(2)	The swap contract has an amortizing notional principal amount which is reduced by $1.0 million on a quarterly basis.


(3)	This forward starting swap contract has a notional principal amount of $100.0 million.


(4)	This forward starting swap contract has a notional principal amount of $100.0 million.


(5)	This forward starting swap contract has a notional principal amount of $150.0 million.


(6)	This forward starting swap contract has a notional principal amount of $100.0 million.


(7)	For these swap contracts that are indexed to LIBOR, the Company is monitoring and evaluating risks related to the expected future cessation of LIBOR.

The Company performs an initial quantitative assessment of hedge effectiveness using the “Hypothetical Derivative Method” in the period in which the hedging transaction is entered. Under this method, the Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. In future reporting periods, the Company performs a qualitative analysis for quarterly prospective and retrospective assessments of hedge effectiveness. The Company also monitors the risk of counterparty default on an ongoing basis and noted that the counterparties are reputable financial institutions. The entire change in the fair value of the derivative is initially reported in Other comprehensive income (outside of earnings) in the Consolidated Statements of Comprehensive Income and subsequently reclassified to earnings in Interest expense, net in the Consolidated Statements of Operations when the hedged transactions affect earnings.

The location and amount of gains or losses recognized in the Consolidated Statements of Operations for interest rate swap contracts for each of the periods, presented on a pretax basis, are as follows:



	Interest Expense, net
(In thousands)	2020			2019		2018
Total amounts of expense line items presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	$	191,607		$	180,789	$	16,025
(Loss) or gain on cash flow hedging relationships:
(Loss) or gain reclassified from comprehensive income into income	$	(24,505	)	$	13	$	827
Gain or (loss) on interest rate swap contracts not designated as hedging instruments:
Gain or (loss) recognized as interest expense	$	—		$	51	$	—