Derivative Instruments

12 Months Ended

Sep. 29, 2019

Derivative Instruments and Hedges, Assets [Abstract]

DERIVATIVE INSTRUMENTS

Interest rate swaps — We have used interest rate swaps to mitigate interest rate volatility with regard to variable rate borrowings under our senior credit facility. In June 2015, we entered into forward-starting interest rate swap agreements that effectively converted $500.0 million of our variable rate borrowings to a fixed rate from October 2018 through October 2022. These agreements were designated as cash flow hedges under the terms of the FASB authoritative guidance for derivatives and hedging. To the extent that they are effective in offsetting the variability of the hedged cash flows, changes in the fair values of the derivatives are not

included in earnings, but are included in OCI. These changes in fair value were subsequently reclassified into net earnings as a component of interest expense as the hedged interest payments were made on our variable rate debt.

Effective July 2, 2019, the Company terminated all interest rate swap agreements in anticipation of the securitization transaction and related retirement of our senior credit facility (see Note 7, Indebtedness). The fair value of the interest rate swaps at the termination date was $23.6 million, which was required to be paid in full on July 8, 2019. As a result of the decision to extinguish the senior credit facility, forecasted cash flows associated with the variable-rate debt interest payments were no longer considered to be probable. Consequently, unrealized losses in other comprehensive income at the termination date were immediately reclassified to “Interest expense, net” in the accompanying consolidated statement of earnings.

Financial position — The following derivative instruments were outstanding as of the end of each fiscal year (in thousands):



	Balance Sheet Location	Fair Value
	Balance Sheet Location	2019		2018
Derivatives designated as hedging instruments:
Interest rate swaps	Accrued liabilities	$	—	$	(26	)
Interest rate swaps	Other long-term liabilities	—		(1,266		)
Interest rate swaps	Other assets, net	—		589
Total derivatives (Note 5)		$	—	$	(703	)

Financial performance — The following table summarizes the accumulated OCI activity related to our interest rate swap derivative instruments in each fiscal year (in thousands):



	Location in Income	2019			2018		2017
(Loss) gain recognized in OCI	N/A	$	(23,625	)	$	18,769	$	19,768
Loss reclassified from accumulated OCI into net earnings	Interest expense, net	$	24,328		$	3,455	$	5,070

Amounts reclassified from accumulated OCI into interest expense represent payments made to the counterparty for the effective portions of the interest rate swaps. During the fiscal years presented, our interest rate swaps had no hedge ineffectiveness.