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Derivative financial instruments | 9 Months Ended
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Apr. 01, 2023
Derivative financial instruments |
Derivative financial instruments | ​ 6. Derivative financial instruments ​ Many of the Company’s subsidiaries purchase and sell products in currencies other than their functional currencies, which subjects the Company to the risks associated with fluctuations in currency exchange rates. This foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase from suppliers. The Company’s foreign operations transactions are denominated primarily in the following currencies: U.S. Dollar, Euro, British Pound, Japanese Yen, Chinese Yuan, Taiwan Dollar, Canadian Dollar and Mexican Peso. The Company also, to a lesser extent, has foreign operations transactions in other EMEA and Asian foreign currencies. ​ The Company uses economic hedges to reduce this risk utilizing natural hedging (i.e., offsetting receivables and payables in the same foreign currency) and creating offsetting positions through the use of derivative financial instruments (primarily forward foreign exchange contracts typically with maturities of less than 60 days, but no longer than one year). The Company continues to have exposure to foreign currency risks to the extent they are not economically hedged. The fair value of forward foreign exchange contracts are based upon Level 2 criteria under the ASC 820 fair value hierarchy. The Company’s master netting and other similar arrangements with various financial institutions related to derivative financial instruments allow for the right of offset. The Company’s policy is to present derivative financial instruments with the same counterparty as either a net asset or liability when the right of offset exists. Under the Company’s economic hedging policies, gains and losses on the derivative financial instruments are classified within the same line item in the consolidated statements of operations as the remeasurement of the underlying assets or liabilities being economically hedged. ​ During the third quarter of fiscal 2023, the Company entered into a fixed-to-fixed rate cross currency swap (the “cross-currency swap”) with a notional amount of $500.0 million, or €472.6 million, that is set to mature in March 2028. The Company designated this derivative contract as a net investment hedge of its European operations and elected the spot method for measuring hedge effectiveness. Changes in fair value of the cross-currency swap is presented in Accumulated other comprehensive income in the Consolidated Balance Sheets. Amounts related to the cross-currency swap recognized directly in net income represent net periodic interest settlements and accruals, which are recognized in Interest and other financing expenses, net, on the Consolidated Statements of Operations. The fair value of the cross-currency swaps are based upon Level 2 criteria under the ASC 820 fair value hierarchy. ​ The Company uses these derivative financial instruments to manage risks associated with foreign currency exchange rates and interest rates. The Company does not enter derivative financial instruments for trading or speculative purposes and monitors the financial stability and credit standing of its counterparties. ​ The locations and fair values of the Company’s derivative financial instruments in the Company’s Consolidated Balance Sheets are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | April 1, |  | July 2,
​ | ​ | 2023 | ​ | 2022
​ | ​ | (Thousands)
Economic hedges | ​ | ​ | ​ | ​ | ​ | ​
Prepaid and other current assets | ​ | $ | 50,627 | ​ | $ | 24,907
Accrued expenses and other | ​ | ​ | 30,785 | ​ | ​ | 29,663
Cross-currency swap | ​ | ​ | ​ | ​ | ​ | ​
Other liabilities | ​ | $ | 15,407 | ​ | ​ | —
​ The locations of derivative financial instruments on the Company’s Consolidated Statements of Operations are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | Third Quarters Ended | ​ | Nine Months Ended
​ | ​ | ​ | April 1, |  | April 2, |  | April 1, |  | April 2,
​ | ​ | ​ | 2023 | ​ | 2022 |  | 2023 | ​ | 2022
​ | ​ | ​ | (Thousands)
Economic hedges | Other expense, net | ​ | $ | 18,359 | ​ | $ | (8,777) | ​ | $ | 29,543 | ​ | $ | (24,560)
Cross currency swap | Interest and other financing expense, net | ​ | ​ | (524) | ​ | ​ | — | ​ | ​ | (524) | ​ | ​ | —
​

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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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