Derivatives and Hedging

6 Months Ended

Jan. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

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:


	January 31, 2022				July 31, 2021
			Fair Value in					Fair Value in
			Other Current					Other Current
Cash Flow Hedges	Notional		Liabilities			Notional		Liabilities
Foreign currency forward contracts	$	40,249	$	943		$	41,899	$	88
Interest rate swap agreements	379,275		4,713			482,138		11,420
Total derivative financial instruments	$	419,524	$	5,656		$	524,037	$	11,508

Foreign currency forward contracts outstanding at January 31, 2022 are used to exchange British Pounds Sterling (“GBP”) for Euro. The total notional value of these contracts, at January 31, 2022 is 30,000 GBP ($40,249), and these contracts have various maturity dates through July 29, 2022.

The Company entered into interest rate swaps to convert a portion of the Company’s long-term debt from floating-rate to fixed-rate debt. As of January 31, 2022, the outstanding swaps had notional contract values of $379,275, partially hedging the interest rate risk related to the Company’s U.S. dollar term loan tranche that matures in February 2026.

Net Investment Hedges

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 for the three months ended January 31, 2022, net of tax, were $18,388 and gains for the six months ended January 31, 2022, net of tax, were $27,628. Losses for the three and six months ended January 31, 2021, net of tax, were $16,436 and $10,954, respectively.

There were no amounts reclassified out of accumulated other comprehensive income (“AOCI”) pertaining to the net investment hedge during the three and six-month periods ended January 31, 2022 and January 31, 2021, respectively.

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 $29,255 and a fair value of $1,704, which is included in Other current liabilities in the Condensed Consolidated Balance Sheet as of January 31, 2022. These other derivative instruments had a notional amount totaling approximately $32,466 and a fair value of $1,948, which is included in Other current liabilities in the Condensed Consolidated Balance Sheet as of July 31, 2021. For these derivative instruments, changes in fair value are recognized in earnings.

The total amounts presented in the Condensed Consolidated Statements of Income and Comprehensive Income due to changes in the fair value of the following derivative instruments are as follows:


	Three Months Ended January 31,
	2022		2021
Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts	$	(479)	$	(66)
Interest rate swap agreements (1)	2,608		2,417
Total gain (loss)	$	2,129	$	2,351

(1) Other comprehensive income (loss), net of tax, before reclassification from AOCI was $795 and $(206) for the three months ended January 31, 2022 and 2021, respectively.


	Six Months Ended January 31,
	2022		2021
Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts	$	(620)	$	(66)
Interest rate swap agreements (2)	5,104		5,749
Total gain (loss)	$	4,484	$	5,683

(2) Other comprehensive income (loss), net of tax, before reclassification from AOCI was $1,402 and $352 for the six months ended January 31, 2022 and 2021, respectively.


	Three Months Ended January 31,
	2022				2021
			Interest					Interest
	Sales		Expense			Sales		Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	$	(271)	$	—		$	7	$	—
Interest rate swap agreements	—		(1,813)			—		(2,623)
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Gain ( loss) recognized in income, net of tax

Interest rate swap agreements	—		2			—		(8)
Total gain (loss)	$	(271)	$	(1,811)		$	7	$	(2,631)


	Six Months Ended January 31,
	2022				2021
			Interest					Interest
	Sales		Expense			Sales		Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	$	(284)	$	—		$	7	$	—
Interest rate swap agreements	—		(3,702)			—		(5,397)
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Gain (loss) recognized in income, net of tax

Interest rate swap agreements	—		89			—		(46)
Total gain (loss)	$	(284)	$	(3,613)		$	7	$	(5,443)