XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.20.2

Derivative Instruments | 9 Months Ended
--- | ---
Jun. 26, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | DERIVATIVE INSTRUMENTS: The Company enters into contractual derivative arrangements to manage changes in market conditions related to interest on debt obligations, foreign currency exposures and exposure to fluctuating gasoline and diesel fuel prices. Derivative instruments utilized during the period include interest rate swap agreements, foreign currency forward exchange contracts and gasoline and diesel fuel agreements. All derivative instruments are recognized as either assets or liabilities on the balance sheet at fair value at the end of each quarter. The counterparties to the Company's contractual derivative agreements are all major international financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company continually monitors its positions and the credit ratings of its counterparties and does not anticipate nonperformance by the counterparties. For designated hedging relationships, the Company formally documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged, and how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively for designated hedges. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items. Cash Flow Hedges The Company has approximately $3.3 billion notional amount of outstanding interest rate swap agreements as of June 26, 2020, which fixes the rate on a like amount of variable rate borrowings through January of fiscal 2025. During the nine months ended June 26, 2020, the Company entered into approximately $800.0 million notional amount of interest rate swap agreements to hedge the cash flow risk of variability in interest payments on variable rate borrowings. Changes in the fair value of a derivative that is designated as and meets all the required criteria for a cash flow hedge are recorded in accumulated other comprehensive income (loss) and reclassified into earnings as the underlying hedged item affects earnings. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of June 26, 2020 and September 27, 2019, approximately ($97.9) million and ($31.1) million, respectively, of unrealized net of tax losses related to the interest rate swaps were included in "Accumulated other comprehensive loss." The following table summarizes the effect of our derivatives designated as cash flow hedging instruments on Other comprehensive income (loss) (in thousands):
| Three Months Ended |  |
| June 26, 2020 |  | June 28, 2019
Interest rate swap agreements | $ | (22,688) |  |  | $ | (33,975) |
| Nine Months Ended |  |
| June 26, 2020 |  | June 28, 2019
Interest rate swap agreements1 | $ | (108,018) |  |  | $ | (86,500) |
(1) | Unrealized losses during the nine month period of fiscal 2020 were impacted by changes in interest rates due to actions taken by the federal government in response to COVID-19.
Derivatives not Designated in Hedging Relationships The Company entered into a series of pay fixed/receive floating gasoline and diesel fuel agreements based on the Department of Energy weekly retail on-highway index in order to limit its exposure to price fluctuations for gasoline and diesel fuel. As of June 26, 2020, the Company has contracts for approximately 16.7 million gallons outstanding through fiscal 2021. The Company does not record its gasoline and diesel fuel agreements as hedges for accounting purposes. The impact on earnings related to the change in fair value of these unsettled contracts was a gain of approximately $5.0 million and a loss of approximately $4.0 million for the three and nine months ended June 26, 2020, respectively. The impact on earnings related to the change in fair value of these unsettled contracts was a gain of approximately $1.1 million and a loss of approximately $3.2 million for the three and nine months ended June 28, 2019, respectively. The change in fair value for unsettled contracts is included in "Selling and general corporate expenses" in the Condensed Consolidated Statements of (Loss) Income. When the contracts settle, the gain or loss is recorded to "Costs of services provided" in the Condensed Consolidated Statements of (Loss) Income. As of June 26, 2020, the Company had no material foreign currency forward exchange contracts outstanding to mitigate the risk of changes in foreign currency exchange rates on short-term intercompany loans to international subsidiaries. Gains and losses on foreign currency exchange contracts are recognized in earnings as the contracts were not designated as hedging instruments, substantially offsetting currency transaction gains and losses on short-term intercompany loans. The following table summarizes the location and fair value, using Level 2 inputs (see Note 15 for a description of the fair value levels), of the Company's derivatives designated and not designated as hedging instruments in the Condensed Consolidated Balance Sheets (in thousands):
|  | Balance Sheet Location |  | June 26, 2020 |  | September 27, 2019
ASSETS |  |  |  |  |  |
Not designated as hedging instruments: |  |  |  |  |  |
Foreign currency forward exchange contracts |  | Prepayments and other current assets |  | $ | — |  |  | $ | 64 |
LIABILITIES |  |  |  |  |  |
Designated as hedging instruments: |  |  |  |  |  |
Interest rate swap agreements |  | Accounts payable |  | 5,377 |  |  | — |
Interest rate swap agreements |  | Other Noncurrent Liabilities |  | 127,234 |  |  | 43,112 |
|  |  |  | 132,611 |  |  | 43,112 |
Not designated as hedging instruments: |  |  |  |  |  |
Foreign currency forward exchange contracts |  | Accounts payable |  | 49 |  |  | — |
Gasoline and diesel fuel agreements |  | Accounts payable |  | 4,424 |  |  | 462 |
|  |  |  | $ | 137,084 |  |  | $ | 43,574 |
The following table summarizes the location of the (gain) loss reclassified from "Accumulated other comprehensive loss" into earnings for derivatives designated as hedging instruments and the location of the (gain) loss for the Company's derivatives not designated as hedging instruments in the Condensed Consolidated Statements of (Loss) Income (in thousands):
|  |  |  | Three Months Ended |  |
|  | Income Statement Location |  | June 26, 2020 |  | June 28, 2019
Designated as hedging instruments: |  |  |  |  |  |
Interest rate swap agreements |  | Interest and Other Financing Costs, net |  | $ | 12,319 |  |  | $ | (2,114) |
Not designated as hedging instruments: |  |  |  |  |  |
Gasoline and diesel fuel agreements |  | Costs of services provided / Selling and general corporate expenses |  | (2,013) |  |  | (792) |
Foreign currency forward exchange contracts |  | Interest and Other Financing Costs, net |  | 45 |  |  | (6) |
|  |  |  | (1,968) |  |  | (798) |
|  |  |  | $ | 10,351 |  |  | $ | (2,912) |
|  |  |  | Nine Months Ended |  |
|  | Income Statement Location |  | June 26, 2020 |  | June 28, 2019
Designated as hedging instruments: |  |  |  |  |  |
Interest rate swap agreements |  | Interest and Other Financing Costs, net |  | $ | 17,692 |  |  | $ | (6,143) |
Not designated as hedging instruments: |  |  |  |  |  |
Gasoline and diesel fuel agreements |  | Costs of services provided / Selling and general corporate expenses |  | 6,892 |  |  | 4,677 |
Foreign currency forward exchange contracts |  | Interest and Other Financing Costs, net |  | 113 |  |  | 238 |
|  |  |  | 7,005 |  |  | 4,915 |
|  |  |  | $ | 24,697 |  |  | $ | (1,228) |
At June 26, 2020, the net of tax loss expected to be reclassified from "Accumulated other comprehensive loss" into earnings over the next twelve months based on current market rates is approximately $39.4 million.

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 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 http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration