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Derivative Financial Instruments | 3 Months Ended
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Jan. 01, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments Interest Rates From time to time, we enter into designated cash flow hedges to manage the variability in cash flows due to changes in benchmark interest rates. We enter into interest rate swap agreements and treasury locks, which are synthetic forward sales of U.S. Treasury securities settled in cash based upon the difference between an agreed-upon treasury rate and the prevailing treasury rate at settlement. These agreements are cash settled at the time of the pricing of the related debt. Each derivative agreement's gain or loss is recorded in accumulated other comprehensive income (“AOCI”) and is subsequently reclassified to interest expense over the life of the related debt. To hedge the exposure to changes in the fair value of our fixed-rate debt, we enter into interest rate swap agreements, which are designated as fair value hedges. The changes in fair values of these derivative instruments and the offsetting changes in fair values of the underlying hedged debt due to changes in the relevant benchmark interest rates are recorded in interest expense. Refer to Note 8, Debt, for additional information on our long-term debt. Foreign Currency To reduce cash flow volatility from foreign currency fluctuations, we enter into forward and swap contracts to hedge portions of cash flows of anticipated intercompany royalty payments, inventory purchases, and intercompany borrowing and lending activities. The resulting gains and losses from these derivatives are recorded in AOCI and subsequently reclassified to revenue, product and distribution costs, or interest income and other, net, respectively, when the hedged exposures affect net earnings. From time to time, we may enter into financial instruments, including, but not limited to, forward and swap contracts or foreign currency-denominated debt, to hedge the currency exposure of our net investments in certain international operations. The resulting gains and losses from these derivatives are recorded in AOCI and are subsequently reclassified to net earnings when the hedged net investment is either sold or substantially liquidated. Foreign currency forward and swap contracts not designated as hedging instruments are used to mitigate the foreign exchange risk of certain other balance sheet items. Gains and losses from these derivatives are largely offset by the financial impact of translating foreign currency-denominated payables and receivables, and these gains and losses are recorded in interest income and other, net. Commodities Depending on market conditions, we may enter into coffee forward contracts, futures contracts and collars to hedge anticipated cash flows under our price-to-be-fixed green coffee contracts, which are described further in Note 5, Inventories, or our longer-dated forecasted coffee demand where underlying fixed price and price-to-be-fixed contracts are not yet available. The resulting gains and losses are recorded in AOCI and are subsequently reclassified to product and distribution costs when the hedged exposure affects net earnings. Depending on market conditions, we may also enter into dairy forward contracts and futures contracts to hedge a portion of anticipated cash flows under our dairy purchase contracts and our forecasted dairy demand. The resulting gains or losses are recorded in AOCI and are subsequently reclassified to product and distribution costs when the hedged exposure affects net earnings. Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge. Cash flows from hedging transactions are classified in the same categories as the cash flows from the respective hedged items. For de-designated cash flow hedges in which the underlying transactions are no longer probable of occurring, the related accumulated derivative gains or losses are recognized in interest income and other, net on our consolidated statements of earnings. These derivatives may be accounted for prospectively as non-designated derivatives until maturity, re-designated to new hedging relationships or terminated early. We continue to believe transactions related to our other designated cash flow hedges are probable to occur. To mitigate the price uncertainty of a portion of our future purchases, including diesel fuel and other commodities, we enter into swap contracts, futures and collars that are not designated as hedging instruments. The resulting gains and losses are recorded in interest income and other, net to help offset price fluctuations on our beverage, food, packaging and transportation costs, which are included in product and distribution costs on our consolidated statements of earnings. Gains and losses on derivative contracts and foreign currency-denominated debt designated as hedging instruments included in AOCI and expected to be reclassified into earnings within 12 months, net of tax (in millions):
| Net Gains/(Losses) Included in AOCI |  | Net Gains/(Losses) Expected to be Reclassified from AOCI into Earnings within 12 Months |  | Outstanding Contract/Debt Remaining Maturity (Months)
| Jan 1, 2023 |  | Oct 2, 2022 |  |
Cash Flow Hedges: |  |  |  |  |  |  |
Coffee | $ | (36.4) |  |  | $ | 153.9 |  |  | $ | (20.7) |  |  | 5
Cross-currency swaps | (1.7) |  |  | (1.9) |  |  | — |  |  | 23
Dairy | (4.2) |  |  | (2.6) |  |  | (4.2) |  |  | 8
Foreign currency - other | 12.8 |  |  | 55.3 |  |  | 12.1 |  |  | 33
Interest rates | (5.4) |  |  | (5.8) |  |  | 0.7 |  |  | 0
Net Investment Hedges: |  |  |  |  |  |  |
Cross-currency swaps | 52.7 |  |  | 67.3 |  |  | — |  |  | 111
Foreign currency | 16.1 |  |  | 16.1 |  |  | — |  |  | 0
Foreign currency debt | 88.1 |  |  | 125.7 |  |  | — |  |  | 15
Pre-tax gains and losses on derivative contracts and foreign currency-denominated long-term debt designated as hedging instruments recognized in other comprehensive income (“OCI”) and reclassifications from AOCI to earnings (in millions):
|  | Quarter Ended |  |
|  | Gains/(Losses) Recognized in OCI Before Reclassifications |  | Gains/(Losses) Reclassified from AOCI to Earnings |  | Location of gain/(loss)
|  |  |  | Jan 1, 2023 |  | Jan 2, 2022 |  | Jan 1, 2023 |  | Jan 2, 2022 |
Cash Flow Hedges: |  |  |  |  |  |  |  |  |  |  |  |
Coffee |  |  |  | $ | (119.4) |  |  | $ | 71.5 |  |  | $ | 96.7 |  |  | $ | 6.5 |  |  | Product and distribution costs
Cross-currency swaps |  |  |  | (11.7) |  |  | 4.5 |  |  | (2.7) |  |  | (0.8) |  |  | Interest expense
|  |  |  |  | (9.1) |  |  | 6.9 |  |  | Interest income and other, net
Dairy |  |  |  | (3.6) |  |  | 4.6 |  |  | (1.5) |  |  | (0.4) |  |  | Product and distribution costs
Foreign currency - other |  |  |  | (46.0) |  |  | 6.9 |  |  | 8.0 |  |  | 2.2 |  |  | Licensed stores revenue
|  |  |  |  | 2.2 |  |  | (1.5) |  |  | Product and distribution costs
|  |  |  |  | 0.2 |  |  | — |  |  | Interest income and other, net
Interest rates |  |  |  | — |  |  | 1.2 |  |  | (0.5) |  |  | (0.4) |  |  | Interest expense
Net Investment Hedges: |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps |  |  |  | (14.0) |  |  | 16.3 |  |  | 5.3 |  |  | 3.4 |  |  | Interest expense
Foreign currency debt |  |  |  | (50.6) |  |  | 25.2 |  |  | — |  |  | — |  |  |
Pre-tax gains and losses on non-designated derivatives and designated fair value hedging instruments and the related fair value hedged item recognized in earnings (in millions):
|  |  | Gains/(Losses) Recognized in Earnings |  |  |  |
| Location of gain/(loss) recognized in earnings |  | Quarter Ended |  |
|  | Jan 1, 2023 |  | Jan 2, 2022 |  |  |  |
Non-Designated Derivatives: |  |  |  |  |  |  |  |  |
Foreign currency - other | Interest income and other, net |  | $ | (11.6) |  |  | $ | 10.2 |  |  |  |  |
Coffee | Interest income and other, net |  | (5.5) |  |  | 3.1 |  |  |  |  |
Diesel fuel and other commodities | Interest income and other, net |  | (0.2) |  |  | — |  |  |  |  |
Fair Value Hedges: |  |  |  |  |  |  |  |  |
Interest rate swap | Interest expense |  | (1.6) |  |  | (4.8) |  |  |  |  |
Long-term debt (hedged item) | Interest expense |  | (3.3) |  |  | 8.2 |  |  |  |  |
Notional amounts of outstanding derivative contracts (in millions):
| Jan 1, 2023 |  | Oct 2, 2022
Coffee | $ | 401 |  |  | $ | 649 |
Cross-currency swaps | 1,124 |  |  | 741 |
Dairy | 68 |  |  | 94 |
Diesel fuel and other commodities | 25 |  |  | 33 |
Foreign currency - other | 1,305 |  |  | 1,269 |
Interest rate swaps | 1,100 |  |  | 1,100 |
Fair value of outstanding derivative contracts (in millions) including the location of the asset and/or liability on the consolidated balance sheets:
|  |  | Derivative Assets
| Balance Sheet Location |  | Jan 1, 2023 |  | Oct 2, 2022
Designated Derivative Instruments: |  |  |  |  |
Cross-currency swaps | Other long-term assets |  | $ | 85.4 |  |  | $ | 115.4 |
Dairy | Prepaid expenses and other current assets |  | 0.2 |  |  | 0.5 |
Foreign currency - other | Prepaid expenses and other current assets |  | 22.4 |  |  | 39.9 |
Other long-term assets |  | 13.8 |  |  | 33.5 |
Non-designated Derivative Instruments: |  |  |  |  |
Diesel fuel and other commodities | Prepaid expenses and other current assets |  | 0.1 |  |  | 0.4 |
Foreign currency | Prepaid expenses and other current assets |  | 15.8 |  |  | 34.3 |
Other long-term assets |  | — |  |  | 7.3 |
|  |  | Derivative Liabilities
| Balance Sheet Location |  | Jan 1, 2023 |  | Oct 2, 2022
Designated Derivative Instruments: |  |  |  |  |
Cross-currency swaps | Other long-term liabilities |  | $ | 1.6 |  |  | $ | — |
Dairy | Accrued liabilities |  | 3.1 |  |  | 2.9 |
Foreign currency - other | Accrued liabilities |  | 10.0 |  |  | 0.3 |
Other long-term liabilities |  | 10.1 |  |  | — |
Interest rate | Accrued liabilities |  | 20.4 |  |  | 12.0 |
Interest rate swap | Other long-term liabilities |  | 33.6 |  |  | 34.0 |
Non-designated Derivative Instruments: |  |  |  |  |
Diesel fuel and other commodities | Accrued liabilities |  | 0.4 |  |  | — |
Foreign currency | Accrued liabilities |  | 1.3 |  |  | 5.8 |
The following amounts were recorded on the consolidated balance sheets related to fixed-to-floating interest rate swaps designated in fair value hedging relationships (in millions):
| Carrying amount of hedged item |  | Cumulative amount of fair value hedging adjustment included in the carrying amount
| Jan 1, 2023 |  | Oct 2, 2022 |  | Jan 1, 2023 |  | Oct 2, 2022
Location on the balance sheet |  |  |  |  |  |  |
Long-term debt | $ | 1,051.0 |  |  | $ | 1,047.7 |  |  | $ | (49.0) |  |  | $ | (52.3) |
Additional disclosures related to cash flow gains and losses included in AOCI, as well as subsequent reclassifications to earnings, are included in Note 11, Equity.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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