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Derivative Financial Instruments | 9 Months Ended
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Jul. 02, 2022
Derivative Instruments and Hedges, Assets [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments We principally use derivative financial instruments to manage foreign exchange risk related to foreign operations and foreign currency transactions an d interest rate risk associated with long-term debt. We enter into derivative financial instruments with a number of major financial institutions to minimize counterparty credit risk. Derivatives designated as hedging instruments We use foreign currency contracts as cash flow hedges to effectively fix the exchange rates on future payments and revenue. To mitigate exposure in movements between various currencies, including the Philippine peso and the British pound, we had outstanding foreign currency contracts with notional amounts of $40,479 at July 2, 2022. These contracts mature at various times through March 1, 2024. We use forward currency contracts to hedge our net investment in certain foreign subsidiaries. As of July 2, 2022, we had no outstanding net investment hedges. Interest rate swaps are used to adjust the proportion of total debt that is subject to variable and fixed interest rates. The interest rate swaps are designated as hedges of the amount of future cash flows related to interest payments on variable-rate debt that, in combination with the interest payments on the debt, convert a portion of the variable-rate debt to fixed-rate debt. At July 2, 2022, we had no outstanding interest rate swaps. Foreign currency contracts, net investment hedges and interest rate swaps are recorded in the Consolidated Condensed Balance Sheets at fair value and the related gains or losses are deferred in Shareholders’ Equity as a component of Accumulated Other Comprehensive Income ("AOCIL"). These deferred gains and losses are reclassified into the Consolidated Condensed Statements of Earnings, as necessary, during the periods in which the related payments or receipts affect earnings. However, to the extent the foreign currency contracts and interest rate swaps are not perfectly effective in offsetting the change in the value of the payments and revenue being hedged, the ineffective portion of these contracts is recognized in earnings immediately. Ineffectiveness was not material in the first nine months of 2022 or 2021. Derivatives not designated as hedging instruments We also have foreign currency exposure on balances, primarily intercompany, that are denominated in a foreign currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in the Consolidated Condensed Statements of Earnings. To minimize foreign currency exposure, we had foreign currency contracts with notional amounts of $98,997 at July 2, 2022. The foreign currency contracts are recorded in the Consolidated Condensed Balance Sheets at fair value and resulting gains or losses are recorded in the Consolidated Condensed Statements of Earnings. We recorded the following gains and losses on foreign currency contracts which are included in other income or expense and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other income or expense:
|  |  | Three Months Ended |  | Nine Months Ended
Statements of Earnings location |  | July 2, 2022 |  | July 3, 2021 |  | July 2, 2022 |  | July 3, 2021
Net gain (loss) |  |  |  |  |  |  |  |  |
Foreign currency contracts | Other |  | $ | (2,861) |  |  | $ | (67) |  |  | $ | (6,899) |  |  | $ | 3,026 |
Summary of derivatives The fair value and classification of derivatives is summarized as follows:
| Balance Sheets location |  | July 2, 2022 |  | October 2, 2021
Derivatives designated as hedging instruments: |  |  |  |  |
Foreign currency contracts | Other current assets |  | $ | 430 |  |  | $ | 325 |
Foreign currency contracts | Other assets |  | 227 |  |  | 104 |
| Total asset derivatives |  | $ | 657 |  |  | $ | 429 |
Foreign currency contracts | Accrued liabilities and other |  | $ | 2,971 |  |  | $ | 1,235 |
Foreign currency contracts | Other long-term liabilities |  | 598 |  |  | 537 |
| Total liability derivatives |  | $ | 3,569 |  |  | $ | 1,772 |
Derivatives not designated as hedging instruments: |  |  |  |
Foreign currency contracts | Other current assets |  | $ | 163 |  |  | $ | 226 |
Foreign currency contracts | Accrued liabilities and other |  | $ | 772 |  |  | $ | 480 |

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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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