Item 1. Financial Statements
Item 1. Financial Statements
VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
January 29,
2022 July 31,
2021
ASSETS
Current assets
Cash and cash equivalents $ 125,897 $ 116,314
Merchandise inventories 44,250 42,633
Patronage dividend receivable 4,912 11,860
Notes receivable from Wakefern 27,949 —
Income taxes receivable 8,687 5,111
Other current assets 20,509 20,398
Total current assets 232,204 196,316
Property, equipment and fixtures, net 269,165 256,154
Operating lease assets 276,321 289,461
Notes receivable from Wakefern 28,536 55,295
Investment in Wakefern 33,004 33,004
Goodwill 24,190 24,190
Other assets 33,890 34,584
Total assets $ 897,310 $ 889,004
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities
Operating lease obligations $ 22,161 $ 21,627
Finance lease obligations 563 531
Notes payable to Wakefern 710 632
Current portion of debt 7,466 6,976
Accounts payable to Wakefern 79,092 70,792
Accounts payable and accrued expenses 22,520 25,098
Accrued wages and benefits 24,205 25,036
Income taxes payable 317 1,601
Total current liabilities 157,034 152,293
Long-term debt
Operating lease obligations 265,215 278,135
Finance lease obligations 21,926 22,325
Notes payable to Wakefern 2,593 2,791
Long-term debt 70,042 66,827
Total long-term debt 359,776 370,078
Pension liabilities 10,298 10,182
Other liabilities 14,946 14,978
Commitments and contingencies
Shareholders' equity
Preferred stock, no par value: Authorized 10,000 shares, none issued
— —
Class A common stock, no par value: Authorized 20,000 shares; issued 10,981 shares at January 29, 2022 and 10,978 shares at July 31, 2021
71,808 70,594
Class B common stock, no par value: Authorized 20,000 shares; issued and outstanding 4,294 shares at January 29, 2022 and July 31, 2021
697 697
Retained earnings 304,117 293,185
Accumulated other comprehensive loss ( 7,338 ) ( 9,064 )
Less treasury stock, Class A, at cost: 730 shares at January 29, 2022 and 726 shares at July 31, 2021
( 14,028 ) ( 13,939 )
Total shareholders’ equity 355,256 341,473
Total liabilities and shareholders’ equity $ 897,310 $ 889,004
See notes to consolidated financial statements.
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VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) (Unaudited)
13 Weeks Ended 26 Weeks Ended
January 29,
2022 January 23,
2021 January 29,
2022 January 23,
2021
Sales $ 537,408 $ 522,818 $ 1,031,619 $ 1,012,954
Cost of sales 387,797 380,973 741,829 733,146
Gross profit 149,611 141,845 289,790 279,808
Operating and administrative expense 126,487 126,449 247,770 250,812
Depreciation and amortization 8,460 8,793 16,795 17,507
Operating income 14,664 6,603 25,225 11,489
Interest expense ( 963 ) ( 982 ) ( 1,932 ) ( 1,969 )
Interest income 905 874 1,881 1,766
Income before income taxes 14,606 6,495 25,174 11,286
Income taxes 4,477 1,940 7,717 3,370
Net income $ 10,129 $ 4,555 $ 17,457 $ 7,916
Net income per share:
Class A common stock:
Basic $ 0.78 $ 0.35 $ 1.34 $ 0.61
Diluted $ 0.69 $ 0.31 $ 1.20 $ 0.54
Class B common stock:
Basic $ 0.50 $ 0.23 $ 0.87 $ 0.39
Diluted $ 0.50 $ 0.23 $ 0.87 $ 0.39
See notes to consolidated financial statements.
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VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands) (Unaudited)
13 Weeks Ended 26 Weeks Ended
January 29,
2022 January 23,
2021 January 29,
2022 January 23,
2021
Net income $ 10,129 $ 4,555 $ 17,457 $ 7,916
Other comprehensive income:
Unrealized gains on interest rate swaps, net of tax (1) 759 501 1,550 1,094
Amortization of pension actuarial loss, net of tax (2) 88 101 176 203
Comprehensive income $ 10,976 $ 5,157 $ 19,183 $ 9,213
(1) Amount is net of tax of $ 324 and $ 218 for the 13 weeks January 29, 2022 and January 23, 2021, respectively, and $ 663 and $ 479 for the 26 weeks ended January 29, 2022 and January 23, 2021, respectively.
(2) Amounts are net of tax of $ 38 and $ 45 for the 13 weeks January 29, 2022 and January 23, 2021, respectively, and $ 76 and $ 91 for the 26 weeks ended January 29, 2022 and January 23, 2021, respectively. All amounts are reclassified from accumulated other comprehensive loss to operating and administrative expense.
See notes to consolidated financial statements.
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VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands) (Unaudited)
13 Weeks Ended January 29, 2022 and January 23, 2021
Class A
Common Stock Class B
Common Stock Accumulated
Other
Comprehensive
Income (Loss)
Treasury Stock
Class A Total
Shareholders'
Equity
Shares Issued Amount Shares Issued Amount Retained Earnings Shares Amount
Balance, October 30, 2021
10,987 $ 71,238 4,294 $ 697 $ 297,249 $ ( 8,185 ) 730 $ ( 14,028 ) $ 346,971
Net income — — — — 10,129 — — — 10,129
Other comprehensive income, net of tax of $ 362
— — — — — 847 — — 847
Dividends — — — — ( 3,261 ) — — — ( 3,261 )
Restricted shares forfeited ( 6 ) ( 56 ) — — — — — — ( 56 )
Share-based compensation expense — 626 — — — — — — 626
Balance, January 29, 2022
10,981 $ 71,808 4,294 $ 697 $ 304,117 $ ( 7,338 ) 730 $ ( 14,028 ) $ 355,256
Balance, October 24, 2020
10,988 $ 68,695 4,294 $ 697 $ 286,344 $ ( 8,056 ) 726 $ ( 13,939 ) $ 333,741
Net income — — — — 4,555 — — — 4,555
Other comprehensive income, net of tax of $ 263
— — — — — 602 — — 602
Dividends — — — — ( 3,265 ) — — — ( 3,265 )
Restricted shares forfeited ( 3 ) ( 12 ) — — — — — — ( 12 )
Share-based compensation expense — 641 — — — — — — 641
Balance, January 23, 2021
10,985 $ 69,324 4,294 $ 697 $ 287,634 $ ( 7,454 ) 726 $ ( 13,939 ) $ 336,262
26 Weeks Ended January 29, 2022 and January 23, 2021
Class A
Common Stock Class B
Common Stock Accumulated
Other
Comprehensive
Income (Loss)
Treasury Stock
Class A Total
Shareholders'
Equity
Shares Issued Amount Shares Issued Amount Retained Earnings Shares Amount
Balance, July 31, 2021
10,978 $ 70,594 4,294 $ 697 $ 293,185 $ ( 9,064 ) 726 $ ( 13,939 ) $ 341,473
Net income — — — — 17,457 — — — 17,457
Other comprehensive income, net of tax of $ 739
— — — — — 1,726 — — 1,726
Dividends — — — — ( 6,525 ) — — — ( 6,525 )
Treasury stock purchases — — — — — — 4 ( 89 ) ( 89 )
Restricted shares forfeited ( 6 ) ( 56 ) — — — — — — ( 56 )
Share-based compensation expense 9 1,270 — — — — — — 1,270
Balance, January 29, 2022
10,981 $ 71,808 4,294 $ 697 $ 304,117 $ ( 7,338 ) 730 $ ( 14,028 ) $ 355,256
Balance, July 25, 2020
10,985 $ 68,072 4,294 $ 697 $ 286,241 $ ( 8,751 ) 726 $ ( 13,939 ) $ 332,320
Net income — — — — 7,916 — — — 7,916
Other comprehensive income, net of tax of $ 570
— — — — — 1,297 — — 1,297
Dividends — — — — ( 6,523 ) — — — ( 6,523 )
Restricted shares forfeited ( 8 ) ( 24 ) — — — — — — ( 24 )
Share-based compensation expense 8 1,276 — — — — — — 1,276
Balance, January 23, 2021
10,985 $ 69,324 4,294 $ 697 $ 287,634 $ ( 7,454 ) 726 $ ( 13,939 ) $ 336,262
See notes to consolidated financial statements.
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VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
26 Weeks Ended
January 29,
2022 January 23,
2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 17,457 $ 7,916
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 17,549 18,222
Non-cash share-based compensation 1,214 1,252
Deferred taxes ( 1,233 ) ( 1,456 )
Provision to value inventories at LIFO 521 —
Gain on sale of property, equipment and fixtures ( 220 ) ( 84 )
Changes in assets and liabilities:
Merchandise inventories ( 2,138 ) ( 4,973 )
Patronage dividend receivable 6,948 6,808
Accounts payable to Wakefern 7,767 ( 2,124 )
Accounts payable and accrued expenses ( 2,129 ) ( 1,158 )
Accrued wages and benefits ( 831 ) ( 957 )
Income taxes receivable / payable ( 4,860 ) 3,835
Other assets and liabilities 229 ( 2,370 )
Net cash provided by operating activities 40,274 24,911
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ( 30,483 ) ( 9,958 )
Proceeds from the sale of assets 4,225 107
Investment in notes receivable from Wakefern ( 1,190 ) ( 1,141 )
Net cash used in investing activities ( 27,448 ) ( 10,992 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 7,350 50,000
Principal payments of long-term debt ( 3,975 ) ( 4,091 )
Payments on revolving line of credit — ( 50,000 )
Debt issuance costs ( 4 ) ( 222 )
Dividends ( 6,525 ) ( 6,523 )
Treasury stock purchases, including shares surrendered for withholding taxes ( 89 ) —
Net cash used in financing activities ( 3,243 ) ( 10,836 )
NET INCREASE IN CASH AND CASH EQUIVALENTS 9,583 3,083
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 116,314 111,681
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 125,897 $ 114,764
SUPPLEMENTAL DISCLOSURES OF CASH PAYMENTS MADE FOR:
Interest $ 1,932 $ 1,969
Income taxes $ 13,810 $ 985
NONCASH SUPPLEMENTAL DISCLOSURES:
Investment in Wakefern and increase in notes payable to Wakefern $ — $ 66
Capital expenditures included in accounts payable and accrued expenses $ 3,247 $ 5,138
See notes to consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited)
1. BASIS OF PRESENTATION and ACCOUNTING POLICIES
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly the consolidated financial position as of January 29, 2022 and the consolidated statements of operations, comprehensive income and cash flows for the 13 and 26 weeks ended January 29, 2022 and January 23, 2021 of Village Super Market, Inc. (“Village” or the “Company”).
The significant accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements in the July 31, 2021 Village Super Market, Inc. Annual Report on Form 10-K, which should be read in conjunction with these financial statements. The results of operations for the periods ended January 29, 2022 are not necessarily indicative of the results to be expected for the full year.
Disaggregated Revenues
The following table presents the Company's sales by product categories during each of the periods indicated:
13 Weeks Ended 26 Weeks Ended
January 29, 2022 January 23, 2021 January 29, 2022 January 23, 2021
Amount % Amount % Amount % Amount %
Center Store (1) $ 324,362 60.3 % $ 321,829 61.5 % $ 620,336 60.1 % $ 617,769 61.0 %
Fresh (2) 194,329 36.2 181,965 34.8 374,152 36.3 357,609 35.3
Pharmacy 16,756 3.1 16,671 3.2 33,604 3.3 33,103 3.3
Other (3) 1,961 0.4 2,353 0.5 3,527 0.3 4,473 0.4
Total Sales $ 537,408 100.0 % $ 522,818 100.0 % $ 1,031,619 100.0 % $ 1,012,954 100.0 %
(1) Consists primarily of grocery, dairy, frozen, health and beauty care, general merchandise and liquor.
(2) Consists primarily of produce, meat, deli, seafood, bakery, prepared foods and floral.
(3) Consists primarily of sales related to other income streams, including service fees related to digital sales, gift card and lottery commissions and wholesale sales.
2. MERCHANDISE INVENTORIES
At both January 29, 2022 and July 31, 2021, approximately 62 % of merchandise inventories are valued by the LIFO method while the balance is valued by FIFO. If the FIFO method had been used for the entire inventory, inventories would have been $ 15,842 and $ 15,321 higher than reported at January 29, 2022 and July 31, 2021, respectively.
3. NET INCOME PER SHARE
The Company has two classes of common stock. Class A common stock is entitled to cash dividends as declared 54 % greater than those paid on Class B common stock. Shares of Class B common stock are convertible on a share-for-share basis for Class A common stock at any time.
The Company utilizes the two-class method of computing and presenting net income per share. The two-class method is an earnings allocation formula that calculates basic and diluted net income per share for each class of common stock separately based on dividends declared and participation rights in undistributed earnings. Under the two-class method, Class A common stock is assumed to receive a 54 % greater participation in undistributed earnings than Class B common stock, in accordance with the classes' respective dividend rights. Unvested share-based payment awards that contain nonforfeitable rights to dividends are treated as participating securities and therefore included in computing net income per share using the two-class method.
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Diluted net income per share for Class A common stock is calculated utilizing the if-converted method, which assumes the conversion of all shares of Class B common stock to Class A common stock on a share-for-share basis, as this method is more dilutive than the two-class method. Diluted net income per share for Class B common stock does not assume conversion of Class B common stock to shares of Class A common stock.
The tables below reconcile the numerators and denominators of basic and diluted net income per share for all periods presented.
13 Weeks Ended 26 Weeks Ended
January 29, 2022 January 29, 2022
Class A Class B Class A Class B
Numerator:
Net income allocated, basic $ 7,666 $ 2,165 $ 13,204 $ 3,732
Conversion of Class B to Class A shares 2,165 — 3,732 —
Net income allocated, diluted $ 9,831 $ 2,165 $ 16,936 $ 3,732
Denominator:
Weighted average shares outstanding, basic 9,873 4,294 9,868 4,294
Conversion of Class B to Class A shares 4,294 — 4,294 —
Weighted average shares outstanding, diluted 14,167 4,294 14,162 4,294
13 Weeks Ended 26 Weeks Ended
January 23, 2021 January 23, 2021
Class A Class B Class A Class B
Numerator:
Net income allocated, basic $ 3,437 $ 974 $ 5,971 $ 1,692
Conversion of Class B to Class A shares 974 — 1,692 —
Net income allocated, diluted $ 4,411 $ 974 $ 7,663 $ 1,692
Denominator:
Weighted average shares outstanding, basic 9,850 4,294 9,850 4,294
Conversion of Class B to Class A shares 4,294 — 4,294 —
Weighted average shares outstanding, diluted 14,144 4,294 14,144 4,294
Outstanding stock options to purchase Class A shares of 102 and 156 were excluded from the calculation of diluted net income per share at January 29, 2022 and January 23, 2021, respectively, as a result of their anti-dilutive effect. In addition, 380 and 413 non-vested restricted Class A shares, which are considered participating securities, and their allocated net income were excluded from the diluted net income per share calculation at January 29, 2022 and January 23, 2021, respectively, due to their anti-dilutive effect.
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4. PENSION PLANS
Net periodic pension cost for the three defined benefit pension plans sponsored in fiscal 2022 and 2021 includes the following components:
13 Weeks Ended 26 Weeks Ended
January 29,
2022 January 23,
2021 January 29,
2022 January 23,
2021
Service cost $ 47 $ 54 $ 94 $ 108
Interest cost on projected benefit obligations 420 422 840 844
Expected return on plan assets ( 409 ) ( 483 ) ( 818 ) ( 966 )
Amortization of net losses 126 147 252 294
Net periodic pension cost $ 184 $ 140 $ 368 $ 280
As of January 29, 2022, the Company has no t made any contributions to its pension plans in fiscal 2022. The Company expects to terminate one of the plans during fiscal 2022. The Company will fully fund this plan and liquidate all plan assets to purchase annuity contracts from an insurance company for all participants who do not elect a lump sum distribution. As of July 31, 2021, the funded status of this plan was a net liability of $ 3,844 . Contributions to the remaining plans are expected to be immaterial in fiscal 2022.
5. RELATED PARTY INFORMATION
A description of the Company’s transactions with Wakefern, its principal supplier, and with other related parties is included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2021.
Included in cash and cash equivalents at January 29, 2022 and July 31, 2021 are $ 88,338 and $ 86,670 , respectively, of demand deposits invested at Wakefern at overnight money market rates.
There have been no other significant changes in the Company’s relationships or nature of transactions with related parties during the 26 weeks ended January 29, 2022.
6. COMMITMENTS and CONTINGENCIES
The Company is involved in other litigation incidental to the normal course of business. Company management is of the opinion that the ultimate resolution of these legal proceedings should not have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company.
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7. DEBT
Long-term debt consists of:
January 29,
2022 July 31,
2021
Secured term loans $ 52,650 $ 47,025
Unsecured term loan 19,307 21,104
New Market Tax Credit Financing 5,551 5,674
Total debt, excluding obligations under leases 77,508 73,803
Less current portion 7,466 6,976
Total long-term debt, excluding obligations under leases $ 70,042 $ 66,827
Credit Facility
On January 28, 2022, the Company entered into an amended and restated credit agreement of the Company’s $ 150,500 credit facility (the “Credit Facility”) with Wells Fargo National Bank, National Association (“Wells Fargo”). The notable changes from the previous agreement include: (1) Modification of the reference rate from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR") as a result of the expected cessation of LIBOR, (2) The execution of a fifteen-year $ 7,350 secured term loan to finance the acquisition of the Galloway store shopping center and (3) Modification of the definition of Total Adjusted Debt for the purpose of determining the maximum adjusted debt to EBITDAR ratio financial covenant, as defined in the Credit Facility. Among other things, the Credit Facility provides for:
• An unsecured revolving line of credit providing a maximum amount available for borrowing of $ 75,000 . Indebtedness under this agreement bears interest at the applicable SOFR plus 1.10 % and expires on May 6, 2025.
• An unsecured $ 25,500 term loan issued on May 12, 2020, repayable in equal monthly installments based on a seven-year amortization schedule through May 4, 2027 and bearing interest at the applicable SOFR plus 1.46 %. Prior to the January 28, 2022 amendment to the credit facility, interest accrued on the unsecured term loan at the applicable LIBOR plus 1.35 %. An interest rate swap with notional amounts equal to the term loan fixed the base LIBOR at .41 %, resulting in a fixed effective rate of 1.76 %. In February 2022, the Company executed an amendment and restatement of the interest rate swap that changes the reference rate to SOFR and fixes the base SOFR at .26 % per annum through May 4, 2027, resulting in a fixed effective interest rate of 1.72 % on the term loan.
• A secured $ 50,000 term loan issued on September 1, 2020 repayable in equal monthly installments based on a fifteen-year amortization schedule through September 1, 2035 and bearing interest at the applicable SOFR plus 1.61 %. Prior to the January 28, 2022 amendment to the credit facility, interest accrued on the secured term loan at the applicable LIBOR plus 1.50 %. An interest rate swap with notional amounts equal to the term loan fixed the base LIBOR at .69 %, resulting in a fixed effective rate of 2.19 %. In February 2022, the Company executed an amendment and restatement of the interest rate swap related to the term loan that changes the reference rate to SOFR and fixes the base SOFR at .57 % per annum through September 1, 2035, resulting in a fixed effective interest rate of 2.18 % on the term loan. The term loan is secured by real properties of Village Super Market, Inc. and its subsidiaries, including the sites of three Village stores.
• A secured $ 7,350 term loan issued on January 28, 2022 repayable in equal monthly installments based on a fifteen-year amortization schedule through January 28, 2037 and bearing interest at the applicable SOFR plus 1.50 %. Additionally, Village executed an interest rate swap for a notional amount equal to the term loan amount that fixes the base SOFR at 1.41 % per annum, resulting in a fixed effective interest rate of 2.91 % on the term loan. The term loan is secured by the Galloway store shopping center acquired in the first quarter of fiscal 2022.
The principal purpose of the Credit Facility is to finance general corporate and working capital requirements, Village’s acquisition of certain Fairway assets and the purchase of the Galloway store shopping center. The Credit Facility also provides for up to $ 25,000 of letters of credit ($ 7,336 outstanding at January 29, 2022), which secure obligations for store leases and construction performance guarantees to municipalities. The Credit Facility contains covenants that, among other conditions,
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require a minimum tangible net worth, a minimum fixed charge coverage ratio and a maximum adjusted debt to EBITDAR ratio. The Company was in compliance with all covenants of the credit agreement at January 29, 2022.
New Markets Tax Credit Financing
On December 29, 2017, the Company entered into a financing transaction with Wells Fargo Community Investment Holdings, LLC (“Wells Fargo”) under a qualified New Markets Tax Credit (“NMTC”) program related to the construction of a new store in the Bronx, New York. The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce capital investment in qualified lower income communities. The Act permits taxpayers to claim credits against their Federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDEs”). CDEs are privately managed investment institutions that are certified to make qualified low-income community investments.
In connection with the financing, the Company loaned $ 4,835 to VSM Investment Fund, LLC (the "Investment Fund") at an interest rate of 1.403 % per year and with a maturity date of December 31, 2044. Repayments on the loan commence in March 2025. Wells Fargo contributed $ 2,375 to the Investment Fund and, by virtue of such contribution, is entitled to substantially all of the tax benefits derived from the NMTC. The Investment Fund is a wholly owned subsidiary of Wells Fargo. The loan to the Investment Fund is recorded in other assets in the consolidated balance sheets.
The Investment Fund then contributed the proceeds to a CDE, which, in turn, loaned combined funds of $ 6,563 , net of debt issuance costs, to Village Super Market of NY, LLC, a wholly-owned subsidiary of the Company, at an interest rate of 1.000 % per year with a maturity date of December 31, 2051. These loans are secured by the leasehold improvements and equipment related to the construction of the Bronx store. Repayment of the loans commences in March 2025. The proceeds of the loans from the CDE were used to partially fund the construction of the Bronx store. The Notes payable related to New Markets Tax Credit, net of debt issuance costs, are recorded in long-term debt in the consolidated balance sheets.
The NMTC is subject to 100% recapture for a period of seven years. The Company is required to be in compliance with various regulations and contractual provisions that apply to the New Markets Tax Credit arrangement. Noncompliance could result in Wells Fargo's projected tax benefits not being realized and, therefore, require the Company to indemnify Wells Fargo for any loss or recapture of NMTCs. The Company does not anticipate any credit recapture will be required in connection with this financing arrangement. The transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase Wells Fargo's interest in the Investment Fund. The value attributed to the put/call is de minimis. We believe that Wells Fargo will exercise the put option in December 2024, at the end of the recapture period, that will result in a net benefit to the Company of $ 1,728 . The Company is recognizing the net benefit over the seven-year compliance period in operating and administrative expense.
8. DERIVATIVES AND HEDGING ACTIVITIES
The Company is exposed to interest rate risk arising from fluctuations in LIBOR and SOFR related to the Company’s Credit Facility. The Company manages exposure to this risk and the variability of related cash flows primarily by the use of derivative financial instruments, specifically, interest rate swaps.
The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
As of January 29, 2022, the Company had three interest rate swaps with an aggregate notional value of $ 82,850 to hedge the variable cash flows associated with variable-rate loans under the Company's Credit Facility. The interest rate swaps were executed for risk management and are not held for trading purposes. The objective of the interest rate swaps is to hedge the variability of cash flows resulting from fluctuations in the reference rate. The swaps replaced the applicable reference rate with fixed interest rates and payments are settled monthly when payments are made on the variable-rate loans. The Company's derivatives qualify and have been designated as cash flow hedges of interest rate risk. The gain or loss on the derivative is recorded in Accumulated other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in Accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the variable-rate loans. The Company reclassified $ 85 and $ 82 during the 13 weeks ended January 29, 2022 and January 23, 2021, respectively, and $ 173 and $ 148 during the 26 weeks ended January 29, 2022 and January 23, 2021, respectively, from Accumulated other comprehensive loss to Interest expense.
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The notional value of the interest rate swaps were $ 72,334 as of January 29, 2022. The fair value of interest rate swaps recorded in other assets is $ 3,331 as of January 29, 2022.
In March 2020 and January 2021, the FASB issued ASU 2020-04, "Facilitation of the Effects of Reference Rate Reform on Financial Reporting" and ASU 2021-01, "Reference Rate Reform: Scope", respectively. These standards provide temporary optional expedients and exceptions for the application of GAAP to certain contract modifications, hedging relationships, and other arrangements that are expected to be impacted by the global transition away from certain reference rates, such as LIBOR. The guidance was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships through December 31, 2022. During the second quarter of fiscal 2022, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Additionally, we elected to apply expedients related to the modification of hedged transactions related to reference rate reform. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The adoption of this portion of the ASU is not expected to have a material impact to our consolidated financial statements. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
In connection with the modification of the reference rate from LIBOR to SOFR in the Amended and Restated Credit Facility, in February 2022, the Company executed the amendment and restatement of two interest rate swaps (see note 7). The modified rates are not expected to have a material impact to the consolidated financial statements.
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