XML 31 R18.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Financial Instruments | 6 Months Ended
--- | ---
Oct. 01, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments | Financial Instruments Derivative Financial Instruments The Company is exposed to changes in foreign currency exchange rates, primarily relating to certain anticipated cash flows and the value of the reported net assets of its international operations, as well as changes in the fair value of its fixed-rate debt attributed to changes in the benchmark interest rate. Consequently, the Company uses derivative financial instruments to manage and mitigate such risks. The Company does not enter into derivative transactions for speculative or trading purposes. The following table summarizes the Company's outstanding derivative instruments on a gross basis as recorded in its consolidated balance sheets as of October 1, 2016 and April 2, 2016:
|  | Notional Amounts |  | Derivative Assets |  | Derivative Liabilities
Derivative Instrument(a) |  | October 1, 2016 |  | April 2, 2016 |  | October 1, 2016 |  | April 2, 2016 |  | October 1, 2016 |  | April 2, 2016
|  |  |  |  |  | Balance Sheet Line(b) |  | Fair Value |  | Balance Sheet Line(b) |  | Fair Value |  | Balance Sheet Line(b) |  | Fair Value |  | Balance Sheet Line(b) |  | Fair Value
|  | (millions)
Designated Hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FC — Inventory purchases |  | $ | 414 |  |  | $ | 532 |  |  | PP |  | $ | 4 |  |  | PP |  | $ | 1 |  |  | AE |  | $ | 3 |  |  | AE |  | $ | 14 |
FC — Other(c) |  | 174 |  |  | 210 |  |  | — |  | — |  |  | — |  | — |  |  | (e) |  | 20 |  |  | AE |  | 9 |
IRS — Fixed-rate debt |  | 600 |  |  | 600 |  |  | ONCA |  | 1 |  |  | ONCA |  | 2 |  |  | ONCL |  | 1 |  |  | ONCL |  | 2 |
CCS — NI |  | 621 |  |  | 630 |  |  | — |  | — |  |  | — |  | — |  |  | ONCL |  | 24 |  |  | ONCL |  | 31 |
Total Designated Hedges |  | $ | 1,809 |  |  | $ | 1,972 |  |  |  |  | $ | 5 |  |  |  |  | $ | 3 |  |  |  |  | $ | 48 |  |  |  |  | $ | 56 |
Undesignated Hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FC — Other(d) |  | $ | 581 |  |  | $ | 541 |  |  | (f) |  | $ | 22 |  |  | (g) |  | $ | 19 |  |  | (h) |  | $ | 10 |  |  | AE |  | $ | 3 |
Total Hedges |  | $ | 2,390 |  |  | $ | 2,513 |  |  |  |  | $ | 27 |  |  |  |  | $ | 22 |  |  |  |  | $ | 58 |  |  |  |  | $ | 59 |
(a) | FC = Forward foreign currency exchange contracts; IRS = Interest rate swap contracts; CCS = Cross-currency swap contracts; NI = Net investment hedges.
(b) | PP = Prepaid expenses and other current assets; AE = Accrued expenses and other current liabilities; ONCA = Other non-current assets; ONCL = Other non-current liabilities.
(c) | Primarily includes designated hedges of foreign currency-denominated intercompany royalty payments and other operational exposures.
(d) | Primarily includes undesignated hedges of foreign currency-denominated intercompany loans and other intercompany balances.
(e) | $16 million included within accrued expenses and other current liabilities and $4 million included within other non-current liabilities.
(f) | $16 million included within prepaid expenses and other current assets and $6 million included within other non-current assets.
(g) | $15 million included within prepaid expenses and other current assets and $4 million included within other non-current assets.
(h) | $6 million included within accrued expenses and other current liabilities and $4 million included within other non-current liabilities.
The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, even though they are subject to master netting arrangements. However, if the Company were to offset and record the asset and liability balances of all of its derivative instruments on a net basis in accordance with the terms of each of its master netting arrangements, spread across eight separate counterparties, the amounts presented in the consolidated balance sheets as of October 1, 2016 and April 2, 2016 would be adjusted from the current gross presentation as detailed in the following table:
|  | October 1, 2016 |  | April 2, 2016
Derivative Instrument |  | Gross Amounts Presented in the Balance Sheet |  | Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements |  | Net Amount |  | Gross Amounts Presented in the Balance Sheet |  | Gross Amounts Not Offset in the Balance Sheet that are Subject to Master Netting Agreements |  | Net Amount
|  | (millions)
Derivative assets |  | $ | 27 |  |  | $ | (23 | ) |  | $ | 4 |  |  | $ | 22 |  |  | $ | (11 | ) |  | $ | 11 |
Derivative liabilities |  | $ | 58 |  |  | $ | (23 | ) |  | $ | 35 |  |  | $ | 59 |  |  | $ | (11 | ) |  | $ | 48 |
The Company's master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. Refer to Note 3 for further discussion of the Company's master netting arrangements. The following tables summarize the pretax impact of the effective portion of gains and losses from the Company's designated derivative instruments on its consolidated financial statements for the three-month and six-month periods ended October 1, 2016 and September 26, 2015:
|  | Gains (Losses) Recognized in OCI |  |
|  | Three Months Ended |  | Six Months Ended |  |
Derivative Instrument |  | October 1, 2016 |  | September 26, 2015 |  | October 1, 2016 |  | September 26, 2015 |  |
|  | (millions) |  |
Designated Cash Flow Hedges: |  |  |  |  |  |  |  |  |  |
FC — Inventory purchases |  | $ | (5 | ) |  | $ | 4 |  |  | $ | 6 |  |  | $ | 2 |  |  |
FC — Other |  | (1 | ) |  | (3 | ) |  | (17 | ) |  | (2 | ) |  |
|  | $ | (6 | ) |  | $ | 1 |  |  | $ | (11 | ) |  | $ | — |  |  |
Designated Hedges of Net Investments: |  |  |  |  |  |  |  |  |  |
CCS(a) |  | $ | (6 | ) |  | $ | (1 | ) |  | $ | 7 |  |  | $ | (13 | ) |  |
Total Designated Hedges |  | $ | (12 | ) |  | $ | — |  |  | $ | (4 | ) |  | $ | (13 | ) |  |
|  | Gains (Losses) Reclassified from AOCI to Earnings |  | Location of Gains (Losses) Reclassified from AOCI to Earnings
|  | Three Months Ended |  | Six Months Ended |
Derivative Instrument |  | October 1, 2016 |  | September 26, 2015 |  | October 1, 2016 |  | September 26, 2015 |
|  | (millions) |  |
Designated Cash Flow Hedges: |  |  |  |  |  |  |  |  |  |
FC — Inventory purchases |  | $ | (4 | ) |  | $ | 9 |  |  | $ | (1 | ) |  | $ | 16 |  |  | Cost of goods sold
FC — Other |  | (1 | ) |  | — |  |  | (6 | ) |  | — |  |  | Foreign currency gains (losses)
|  | $ | (5 | ) |  | $ | 9 |  |  | $ | (7 | ) |  | $ | 16 |  |  |
(a) | Amounts recognized in OCI would be recognized in earnings only upon the sale or liquidation of the hedged net investment.
As of October 1, 2016, it is expected that $13 million of net losses deferred in AOCI related to derivative instruments will be recognized in earnings over the next twelve months. No material gains or losses relating to ineffective cash flow hedges were recognized during any of the fiscal periods presented. The following table summarizes the pretax impact of gains and losses from the Company's undesignated derivative instruments on its consolidated financial statements for the three-month and six-month periods ended October 1, 2016 and September 26, 2015:
|  | Gains (Losses) Recognized in Earnings |  | Location of Gains (Losses) Recognized in Earnings
|  | Three Months Ended |  | Six Months Ended |
Derivative Instrument |  | October 1, 2016 |  | September 26, 2015 |  | October 1, 2016 |  | September 26, 2015 |
|  | (millions) |  |
Undesignated Hedges: |  |  |  |  |  |  |  |  |  |
FC — Other |  | $ | (3 | ) |  | $ | (2 | ) |  | $ | (11 | ) |  | $ | 2 |  |  | Foreign currency gains (losses)
Total Undesignated Hedges |  | $ | (3 | ) |  | $ | (2 | ) |  | $ | (11 | ) |  | $ | 2 |  |  |
Risk Management Strategies Forward Foreign Currency Exchange Contracts The Company enters into forward foreign currency exchange contracts to reduce its risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency, intercompany royalty payments made by certain of its international operations, and other foreign currency-denominated operational and intercompany balances and cash flows. As part of its overall strategy to manage the level of exposure to the risk of foreign currency exchange rate fluctuations, primarily to changes in the value of the Euro, the Japanese Yen, the South Korean Won, the Australian Dollar, the Canadian Dollar, the British Pound Sterling, and the Hong Kong Dollar, the Company hedges a portion of its foreign currency exposures anticipated over a two-year period. In doing so, the Company uses forward foreign currency exchange contracts that generally have maturities of two months to two years to provide continuing coverage throughout the hedging period. Interest Rate Swap Contracts During Fiscal 2016, the Company entered into two pay-floating rate, receive-fixed rate interest rate swap contracts which it designated as hedges against changes in the respective fair values of its fixed-rate 2.125% Senior Notes and its fixed-rate 2.625% Senior Notes attributed to changes in the benchmark interest rate (the "Interest Rate Swaps"). The Interest Rate Swaps, which mature on September 26, 2018 and August 18, 2020, respectively, both have notional amounts of $300 million and swap the fixed interest rates on the Company's 2.125% Senior Notes and 2.625% Senior Notes for variable interest rates based on the 3-month London Interbank Offered Rate ("LIBOR") plus a fixed spread. Changes in the fair values of the Interest Rate Swaps were offset by changes in the fair values of the 2.125% Senior Notes and 2.625% Senior Notes attributed to changes in the benchmark interest rate, with no resulting ineffectiveness recognized in earnings during any of the fiscal periods presented. Cross-Currency Swap Contracts During Fiscal 2016, the Company entered into two pay-floating rate, receive-floating rate cross-currency swap contracts, with notional amounts of €280 million and €274 million, which it designated as hedges of its net investment in certain of its European subsidiaries (the "Cross-Currency Swaps"). The Cross-Currency Swaps, which mature on September 26, 2018 and August 18, 2020, respectively, swap the U.S. Dollar-denominated variable interest rate payments based on 3-month LIBOR plus a fixed spread (as paid under the Interest Rate Swaps described above) for Euro-denominated variable interest rate payments based on the 3-month Euro Interbank Offered Rate plus a fixed spread. As a result, the Cross-Currency Swaps, in conjunction with the Interest Rate Swaps, economically convert the Company's $300 million fixed-rate 2.125% and $300 million fixed-rate 2.625% obligations to €280 million and €274 million floating-rate Euro-denominated liabilities, respectively. No material gains or losses related to the ineffective portion, or the amount excluded from effectiveness testing, were recognized in interest expense within the consolidated statements of operations during any of the fiscal periods presented. See Note 3 for further discussion of the Company's accounting policies relating to its derivative financial instruments. Investments As of October 1, 2016, the Company's short-term investments consisted of $523 million of time deposits and $8 million of non-U.S. corporate bonds, and its non-current investments consisted of $122 million of time deposits. As of April 2, 2016, the Company's short-term investments consisted of $621 million of time deposits and $8 million of non-U.S. corporate bonds, and its non-current investments consisted of $187 million of time deposits. The Company's non-current investments as of both October 1, 2016 and April 2, 2016 have maturities of one to two years. No significant realized or unrealized gains or losses on available-for-sale investments or other-than-temporary impairment charges were recorded during any of the fiscal periods presented. Refer to Note 3 of the Fiscal 2016 10-K for further discussion of the Company's accounting policies relating to its investments.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
Name: | us-gaap_FinancialInstrumentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration