XML 35 R20.htm IDEA: XBRL DOCUMENT
v3.19.2

Financial Instruments | 3 Months Ended
--- | ---
Jun. 29, 2019
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 obligations attributed to changes in a 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 June 29, 2019 and March 30, 2019:
|  | Notional Amounts |  | Derivative Assets |  | Derivative Liabilities
Derivative Instrument(a) |  | June 29, 2019 |  | March 30, 2019 |  | June 29, 2019 |  | March 30, 2019 |  | June 29, 2019 |  | March 30, 2019
|  |  |  |  |  | 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 — Cash flow hedges |  | $ | 646.2 |  |  | $ | 636.3 |  |  | PP |  | $ | 13.4 |  |  | PP |  | $ | 19.5 |  |  | (e) |  | $ | 5.1 |  |  | AE |  | $ | 2.3 |
IRS — Fixed-rate debt |  | 300.0 |  |  | 300.0 |  |  |  |  | — |  |  |  |  | — |  |  | ONCL |  | 3.2 |  |  | ONCL |  | 5.9 |
Net investment hedges(c) |  | 704.5 |  |  | 695.3 |  |  | ONCA |  | 9.6 |  |  | ONCA |  | 12.2 |  |  | ONCL |  | 10.9 |  |  | ONCL |  | 6.0 |
Total Designated Hedges |  | 1,650.7 |  |  | 1,631.6 |  |  |  |  | 23.0 |  |  |  |  | 31.7 |  |  |  |  | 19.2 |  |  |  |  | 14.2 |
Undesignated Hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FC — Undesignated hedges(d) |  | 171.3 |  |  | 146.6 |  |  | PP |  | 1.0 |  |  | PP |  | 0.3 |  |  | AE |  | 0.2 |  |  | AE |  | 1.3 |
Total Hedges |  | $ | 1,822.0 |  |  | $ | 1,778.2 |  |  |  |  | $ | 24.0 |  |  |  |  | $ | 32.0 |  |  |  |  | $ | 19.4 |  |  |  |  | $ | 15.5 |
(a) | FC = Forward foreign currency exchange contracts; IRS = Interest rate swap contracts.
(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) | Includes cross-currency swaps designated as hedges of the Company's net investment in certain foreign operations.
(d) | Primarily includes undesignated hedges of foreign currency-denominated intercompany loans and other intercompany balances.
(e) | $3.5 million included within accrued expenses and other current liabilities and $1.6 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 when 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 June 29, 2019 and March 30, 2019 would be adjusted from the current gross presentation as detailed in the following table:
|  | June 29, 2019 |  | March 30, 2019
|  | 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 |  | $ | 24.0 |  |  | $ | (7.9 | ) |  | $ | 16.1 |  |  | $ | 32.0 |  |  | $ | (4.8 | ) |  | $ | 27.2 |
Derivative liabilities |  | 19.4 |  |  | (7.9 | ) |  | 11.5 |  |  | 15.5 |  |  | (4.8 | ) |  | 10.7 |
The Company's master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. See Note 3 for further discussion of the Company's master netting arrangements. The following tables summarize the pretax impact of gains and losses from the Company's designated derivative instruments on its consolidated financial statements for the three-month periods ended June 29, 2019 and June 30, 2018:
|  | Gains (Losses) Recognized in OCI
|  | Three Months Ended
|  | June 29, 2019 |  | June 30, 2018
|  | (millions)
Designated Hedges: |  |  |  |
FC — Cash flow hedges |  | $ | (4.4 | ) |  | $ | 26.1 |
Net investment hedges — effective portion |  | (10.0 | ) |  | 37.4 |
Net investment hedges — portion excluded from assessment of hedge effectiveness |  | 2.5 |  |  | 1.8 |
Total Designated Hedges |  | $ | (11.9 | ) |  | $ | 65.3 |
|  | Location and Amount of Gains (Losses) from Cash Flow Hedges Reclassified from AOCI to Earnings
|  | Three Months Ended
|  | June 29, 2019 |  | June 30, 2018
|  | Cost of goods sold |  | Other expense, net |  | Cost of goods sold |  | Other expense, net
|  | (millions)
Total amounts presented in the consolidated statements of operations in which the effects of related cash flow hedges are recorded |  | $ | (508.0 | ) |  | $ | (4.1 | ) |  | $ | (494.9 | ) |  | $ | (2.0 | )
Effects of cash flow hedging: |  |  |  |  |  |  |  |
FC — Cash flow hedges |  | 6.2 |  |  | 0.2 |  |  | (6.2 | ) |  | 1.4 |
|  | Gains (Losses) from Net Investment Hedges Recognized in Earnings |  | Location of Gains (Losses) Recognized in Earnings
|  | Three Months Ended |
|  | June 29, 2019 |  | June 30, 2018 |
|  | (millions) |  |
Net Investment Hedges |  |  |  |  |  |
Net investment hedges — portion excluded from assessment of hedge effectiveness(a) |  | $ | 5.0 |  |  | $ | 4.3 |  |  | Interest expense
Total Net Investment Hedges |  | $ | 5.0 |  |  | $ | 4.3 |  |  |
(a) | Amounts recognized in other comprehensive income (loss) ("OCI") related to the effective portion of the Company's net investment hedges would be recognized in earnings only upon the sale or liquidation of the hedged net investment.
As of June 29, 2019, it is estimated that $13.6 million of pretax net gains on both outstanding and matured derivative instruments designated as qualifying cash flow hedges deferred in AOCI will be recognized in earnings over the next twelve months. Amounts ultimately recognized in earnings will depend on exchange rates in effect when outstanding derivative instruments are settled. 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 periods ended June 29, 2019 and June 30, 2018:
|  | Gains (Losses) Recognized in Earnings |  | Location of Gains (Losses) Recognized in Earnings
|  | Three Months Ended |
|  | June 29, 2019 |  | June 30, 2018 |
|  | (millions) |  |
Undesignated Hedges: |  |  |  |  |  |
FC — Undesignated hedges |  | $ | 1.9 |  |  | $ | 3.1 |  |  | Other expense, net
Total Undesignated Hedges |  | $ | 1.9 |  |  | $ | 3.1 |  |  |
Risk Management Strategies Forward Foreign Currency Exchange Contracts The Company uses forward foreign currency exchange contracts to mitigate its risk related to exchange rate fluctuations on inventory transactions made in an entity's non-functional currency, the settlement of foreign currency-denominated balances, and the translation of certain foreign operations' net assets into U.S. dollars. 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, the Swiss Franc, the Swedish Krona, the Chinese Renminbi, the New Taiwan Dollar, 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 of the respective exposure. Interest Rate Swap Contract During Fiscal 2016, the Company entered into a pay-floating rate, receive-fixed rate interest rate swap contract which it designated as a hedge against changes in the fair value of its fixed-rate 2.625% Senior Notes, attributed to changes in a benchmark interest rate (the "2.625% Interest Rate Swap"). The 2.625% Interest Rate Swap, which matures on August 18, 2020 and has a notional amount of $300 million, swaps the fixed interest rate on the 2.625% Senior Notes for a variable interest rate based on the 3-month London Interbank Offered Rate ("LIBOR") plus a fixed spread. Changes in the fair value of the 2.625% Interest Rate Swap were offset by changes in the fair value of the 2.625% Senior Notes attributed to changes in the benchmark interest rate, with no resulting net impact reflected in earnings during any of the fiscal periods presented. The following table summarizes the carrying value of the 2.625% Senior Notes and the impacts of the related fair value hedging adjustments as of June 29, 2019 and March 30, 2019:
|  |  |  | Carrying Value of the Hedged Item |  | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Item
Hedged Item |  | Balance Sheet Line in which the Hedged Item is Included |  | June 29, 2019 |  | March 30, 2019 |  | June 29, 2019 |  | March 30, 2019
|  |  |  | (millions)
$300 million 2.625% Senior Notes |  | Long-term debt |  | $ | 296.2 |  |  | $ | 293.4 |  |  | $ | (3.2 | ) |  | $ | (5.9 | )
Cross-Currency Swap Contracts During Fiscal 2016, the Company entered into a pay-floating rate, receive-floating rate cross-currency swap contract with a notional amount of €274 million that was designated as a hedge of its net investment in certain of its European subsidiaries. This cross-currency swap, which matures on August 18, 2020, swaps the U.S. Dollar-denominated variable interest rate payments based on 3-month LIBOR plus a fixed spread (as paid under the 2.625% Interest Rate Swap discussed above) for Euro-denominated variable interest rate payments based on 3-month Euro Interbank Offered Rate ("EURIBOR") plus a fixed spread, which, in conjunction with the 2.625% Interest Rate Swap, economically converts the Company's $300 million fixed-rate 2.625% Senior Notes obligation to a €274 million floating-rate Euro-denominated obligation. Additionally, in August 2018, the Company entered into pay-fixed rate, receive-fixed rate cross-currency swap contracts with an aggregate notional amount of €346 million that were designated as hedges of its net investment in certain of its European subsidiaries. These contracts, which mature on September 15, 2025, swap the U.S. Dollar-denominated fixed interest rate payments on the Company's 3.750% Senior Notes for Euro-denominated 1.29% fixed interest rate payments, thereby economically converting the Company's $400 million fixed-rate 3.750% Senior Notes obligation to a €346 million fixed-rate 1.29% Euro-denominated obligation. See Note 3 for further discussion of the Company's accounting policies relating to its derivative financial instruments. Investments As of June 29, 2019, the Company's short-term investments consisted of $1.093 billion of time deposits and $187.7 million of commercial paper, and its non-current investments consisted of $34.1 million of time deposits. As of March 30, 2019, the Company's short-term investments consisted of $1.167 billion of time deposits and $236.0 million of commercial paper, and its non-current investments consisted of $44.9 million of time deposits. 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 2019 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