XML 21 R11.htm IDEA: XBRL DOCUMENT
v3.20.2

Derivative Instruments and Hedging Activities | 9 Months Ended
--- | ---
Aug. 23, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Designated Cash Flow Hedges The Company actively manages the risk of changes in functional currency equivalent cash flows resulting from anticipated non-functional currency denominated purchases and sales. The Company’s global sourcing organization uses the U.S. dollar as its functional currency and is primarily exposed to changes in functional currency equivalent cash flows from anticipated inventory purchases, as it procures inventory on behalf of subsidiaries with Euro functional currencies. Additionally, a European subsidiary uses Euros as its functional currency and is exposed to anticipated non-functional currency denominated sales. The Company manages these risks by using currency forward contracts formally designated and effective as cash flow hedges. Hedge effectiveness is generally determined by evaluating the ability of a hedging instrument's cumulative change in fair value to offset the cumulative change in the present value of expected cash flows on the underlying exposures. For forward contracts, forward points are excluded from the determination of hedge effectiveness and are included in Cost of goods sold for hedges of anticipated inventory purchases and in Net revenues for hedges of anticipated sales on a straight-line basis over the life of the contract. In each accounting period, differences between the change in fair value of the forward points and the amount recognized on a straight-line basis is recognized in other comprehensive income (loss). There was no hedge ineffectiveness for the nine months ended August 23, 2020. Net Investment Hedges The Company has designated a portion of its outstanding Euro-denominated senior notes as a net investment hedge to manage foreign currency exposures in its foreign operations. Non-designated Cash Flow Hedges The Company enters into derivative instruments not designated as hedges. These derivative instruments are not speculative and are used to manage the Company’s exposure to certain product sourcing activities, some intercompany sales, foreign subsidiaries' royalty payments, interest payments, earnings repatriations, net investment in foreign operations and funding activities but the Company has not elected to apply hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in "Other income (expense), net" in the Company’s consolidated statements of operations. As of August 23, 2020, the Company had forward foreign exchange contracts derivatives that were not designated as hedges in qualifying hedging relationships, of which $516.4 million were contracts to buy and $176.8 million were contracts to sell various foreign currencies. These contracts are at various exchange rates and expire at various dates through February 2022. The table below provides data about the carrying values of derivative and non-derivative instruments:
| August 23, 2020 |  |  |  |  |  | November 24, 2019 |  |  |  |
| Assets |  | (Liabilities) |  | Derivative Net Carrying Value |  | Assets |  | (Liabilities) |  | Derivative Net Carrying Value
| Carrying Value |  | Carrying Value |  |  |  | Carrying Value |  | Carrying Value |  |
| (Dollars in thousands) |  |  |  |  |  |  |  |  |  |
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |
Foreign exchange risk cash flow hedges(1) | $ | 2,955 |  |  | $ | — |  |  | $ | 2,955 |  |  | $ | 6,149 |  |  | $ | — |  |  | $ | 6,149 |
Foreign exchange risk cash flow hedges(2) | — |  |  | (8,062) |  |  | (8,062) |  |  | — |  |  | (3,809) |  |  | (3,809) |
Total | $ | 2,955 |  |  | $ | (8,062) |  |  |  |  | $ | 6,149 |  |  | $ | (3,809) |  |  |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts(1) | $ | 6,283 |  |  | $ | (2,972) |  |  | $ | 3,311 |  |  | $ | 16,323 |  |  | $ | (6,149) |  |  | $ | 10,174 |
Forward foreign exchange contracts(2) | 8,062 |  |  | (9,981) |  |  | (1,919) |  |  | 3,813 |  |  | (8,127) |  |  | (4,314) |
Total | $ | 14,345 |  |  | $ | (12,953) |  |  |  |  | $ | 20,136 |  |  | $ | (14,276) |  |  |
Non-derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |
Euro senior notes | $ | — |  |  | $ | (563,350) |  |  |  |  | $ | — |  |  | $ | (525,255) |  |  |
_____________ (1) Included in "Other current assets" or "Other non-current assets" on the Company’s consolidated balance sheets. (2) Included in "Other accrued liabilities" or "Other long-term liabilities" on the Company’s consolidated balance sheets. The Company's over-the-counter forward foreign exchange contracts are subject to International Swaps and Derivatives Association, Inc. master agreements. These agreements permit the net settlement of these contracts on a per-institution basis; however, the Company records the fair value on a gross basis on its consolidated balance sheets based on maturity dates, including those subject to master netting arrangements. The table below presents the gross and net amounts of these contracts recognized on the Company's consolidated balance sheets by type of financial instrument:
| August 23, 2020 |  |  |  |  |  |  |  |  |  |  | November 24, 2019 |  |  |  |
| Gross Amounts of Assets / (Liabilities) Presented in the Balance Sheet |  | Gross Amounts Not Offset in the Balance Sheet |  | Net Amounts of Assets / (Liabilities) |  |  |  |  |  |  | Gross Amounts of Assets / (Liabilities) Presented in the Balance Sheet |  | Gross Amounts Not Offset in the Balance Sheet |  | Net Amounts of Assets / (Liabilities)
| (Dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange risk contracts and forward foreign exchange contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets | $ | 17,300 |  |  | $ | (3,997) |  |  | $ | 13,303 |  |  |  |  |  |  |  | $ | 21,839 |  |  | $ | (10,142) |  |  | $ | 11,697 |
Financial liabilities | (21,015) |  |  | 3,997 |  |  | (17,018) |  |  |  |  |  |  |  | (16,290) |  |  | 10,142 |  |  | (6,148) |
Total |  |  |  |  | $ | (3,715) |  |  |  |  |  |  |  |  |  |  |  | $ | 5,549 |
Embedded derivative contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets | $ | — |  |  | $ | — |  |  | $ | — |  |  |  |  |  |  |  | $ | 4,446 |  |  | $ | — |  |  | $ | 4,446 |
Financial liabilities | — |  |  | — |  |  | — |  |  |  |  |  |  |  | (1,795) |  |  | — |  |  | (1,795) |
Total |  |  |  |  | $ | — |  |  |  |  |  |  |  |  |  |  |  | $ | 2,651 |
The table below provides data about the amount of gains and losses related to derivative instruments designated as cash flow hedges and non-derivative instruments designated as net investment hedges included in "Accumulated other comprehensive loss" ("AOCI") on the Company’s consolidated balance sheets:
| Amount of Gain (Loss) Recognized in OCI (Effective Portion) |  |  |  | Amount of Gain (Loss) Reclassified from AOCI into Net Income (Loss)(1) |  |  |  |  |  |
| As of August 23, 2020 |  | As of November 24, 2019 |  | Three Months Ended |  |  |  | Nine Months Ended |  |
|  |  |  |  | August 23, 2020 |  | August 25, 2019 |  | August 23, 2020 |  | August 25, 2019
| (Dollars in thousands) |  |  |  |  |  |  |  |  |  |
Foreign exchange risk contracts | $ | (9,192) |  |  | $ | 2,781 |  |  | $ | 4,446 |  |  | $ | 869 |  |  | $ | 9,869 |  |  | $ | 1,586 |
Realized forward foreign exchange swaps (2) | 4,637 |  |  | 4,637 |  |  | — |  |  | — |  |  | — |  |  | — |
Yen-denominated Eurobonds | (19,811) |  |  | (19,811) |  |  | — |  |  | — |  |  | — |  |  | — |
Euro-denominated senior notes | (76,266) |  |  | (38,171) |  |  | — |  |  | — |  |  | — |  |  | — |
Cumulative income taxes | 28,212 |  |  | 25,606 |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | (72,420) |  |  | $ | (24,958) |  |  |  |  |  |  |  |  |
_____________ (1) Amounts reclassified from AOCI were classified as net revenues and cost of goods sold on the consolidated statements of operations. (2) Prior to and during 2005, the Company used foreign exchange currency swaps to hedge the net investment in its foreign operations. For hedges that qualified for hedge accounting, the net gains were included in AOCI and are not reclassified to earnings until the related net investment position has been liquidated. Within the next 12 months, a $8.6 million loss from cash flow hedges is expected to be reclassified from AOCI into net income (loss). The table below presents the effects of the Company's cash flow hedges of foreign exchange risk contracts on the consolidated statements of operations:
| Three Months Ended |  |  |  | Nine Months Ended |  |
| August 23, 2020 |  | August 25, 2019 |  | August 23, 2020 |  | August 25, 2019
| (Dollars in thousands) |  |  |  |  |  |
Amount of Gain (Loss) on Cash Flow Hedge Activity |  |  |  |  |  |  |
Net revenues | $ | 1,325 |  |  | $ | (812) |  |  | $ | (270) |  |  | $ | (3,257) |
Cost of goods sold | $ | 3,121 |  |  | $ | 1,681 |  |  | $ | 10,139 |  |  | $ | 4,843 |
The table below provides data about the amount of gains and losses related to derivatives instruments included in "Other income, net" in the Company's consolidated statements of operations:
| Three Months Ended |  |  |  | Nine Months Ended |  |
| August 23, 2020 |  | August 25, 2019 |  | August 23, 2020 |  | August 25, 2019
| (Dollars in thousands) |  |  |  |  |  |
Realized gain | $ | 979 |  |  | $ | 979 |  |  | $ | 12,068 |  |  | $ | 8,739 |
Unrealized gain (loss) | (11,692) |  |  | 535 |  |  | (1,954) |  |  | (9,102) |
Total | $ | (10,713) |  |  | $ | 1,514 |  |  | $ | 10,114 |  |  | $ | (363) |

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