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Derivative Financial Instruments | 3 Months Ended
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Jun. 29, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments Forward Foreign Currency Exchange Contracts The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currencies for certain of its transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to certain forecasted inventory purchases by using forward foreign currency exchange contracts. The Company only enters into derivative instruments with highly credit-rated counterparties. The Company does not enter into derivative contracts for trading or speculative purposes. Changes in the fair value of the Company’s forward foreign currency exchange contracts that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income and are reclassified from accumulated other comprehensive income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of goods sold within the Company’s consolidated statements of operations and comprehensive (loss) income. As of June 29, 2024, there were no forward foreign currency exchange contracts outstanding. Net Investment Hedges As of March 30, 2024, the Company had $2.5 billion of hedges outstanding to hedge its net investment in Swiss Franc (“CHF”) denominated subsidiaries, of which the Company will exchange semi-annual fixed rate payments on United States Dollar notional amounts for fixed rate payments of 0.0% in CHF. During the first quarter of Fiscal 2025, the Company entered into additional fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $450 million, of which the Company will exchange monthly fixed rate payments on United States Dollar notional amounts for fixed rate payments of 0.0% in CHF. As of June 29, 2024, the Company had $2.95 billion of hedges outstanding to hedge its net investment in CHF denominated subsidiaries. These contracts have maturity dates between September 2024 and June 2029 and are designated as net investment hedges. As of March 30, 2024 and June 29, 2024, the Company had $1 billion of float-to-float cross-currency hedges outstanding to hedge its net investment in Euro denominated subsidiaries. The Company will exchange Euro floating rate payments based on EURIBOR for the United States dollar floating rate amounts based on SOFR CME Term over the life of the agreement. The fixed rate component of semi-annual Euro payments range from 1.149% to 1.215%. These contracts have maturity dates between May 2028 and August 2030 and are designated as net investment hedges. As of March 30, 2024, the Company had $350 million of fixed-to-fixed cross-currency hedges outstanding related to its net investment in Euro denominated subsidiaries, of which the Company will exchange semi-annual fixed rate payments on United States Dollar notional amounts for fixed rate payments of 0.0% in Euro. During the first quarter of Fiscal 2025, the Company entered into additional fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $534 million, of which the Company will exchange monthly fixed rate payments on United States Dollar notional amounts for fixed rate payments of 0.0% in Euro. As of June 29, 2024, the Company had $884 million of fixed-to-fixed cross-currency hedges outstanding related to its net investment in Euro denominated subsidiaries. These contracts have maturity dates between January 2027 and July 2031 and have been designated as net investment hedges. When a cross-currency swap is used as a hedging instrument in a net investment hedge assessed under the spot method, the cross-currency basis spread is excluded from the assessment of hedge effectiveness and is recognized as a reduction in interest expense in the Company’s consolidated statements of operations and comprehensive (loss) income. Accordingly, the Company recorded interest income of $24 million and $15 million during the three months ended June 29, 2024 and July 1, 2023, respectively. The net gain or loss on net investment hedges are reported within CTA as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Upon discontinuation of the hedge, such amounts remain in CTA until the related net investment is sold or liquidated. Fair Value Hedges The Company is exposed to transaction risk from foreign currency exchange rate fluctuations with respect to various cross-currency intercompany loans which will impact earnings on a consolidated basis. To manage the foreign currency exchange rate risk related to these balances, the Company had previously entered into cross-currency swap agreements to hedge its exposure in GBP denominated subsidiaries (the “GBP Fair Value Hedge”) on Euro denominated intercompany loans. As of March 30, 2024 and June 29, 2024, there were no GBP Fair Value Hedge outstanding. When a cross-currency swap is designated as a fair value hedge and qualifies as highly effective, the fair value hedge will be recorded at fair value each period on the Company’s consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency loss on the Company’s consolidated statements of operations and comprehensive (loss) income, which will offset the earnings impact of the underlying transaction being hedged. If the fair value hedge is terminated and the underlying intercompany loans are settled, the accumulated other comprehensive income (“AOCI”) remaining from the hedge at the time of termination will be reclassified to foreign currency loss on the Company’s consolidated statements of operations and comprehensive (loss) income. Accordingly, the Company recorded a foreign currency gain of $28 million during the three months ended July 1, 2023. The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis on the consolidated balance sheets as of June 29, 2024 and March 30, 2024 (in millions):
|  |  |  |  | Fair Value |  |
| Notional Amounts |  | Assets |  | Liabilities |  |
| June 29, 2024 |  | March 30, 2024 |  | June 29, 2024 |  | March 30, 2024 |  | June 29, 2024 |  | March 30, 2024 |  |
Designated net investment hedges | $ | 4,834 |  |  | $ | 3,850 |  |  | $ | 23 |  | (1) | $ | 12 |  | (1) | $ | 125 |  | (2) | $ | 88 |  | (2) |
(1)Recorded within other assets on the Company’s consolidated balance sheets. (2)As of June 29, 2024, the Company recorded $4 million within accrued expenses and current liabilities and $121 million within other long-term liabilities on the Company’s consolidated balance sheets. As of March 30, 2024, the Company recorded $3 million within accrued expenses and current liabilities and $85 million within other long-term liabilities on the Company’s consolidated balance sheets. The Company records and presents the fair value of all of its derivative assets and liabilities on its consolidated balance sheets on a gross basis, as shown in the above table. However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies and with the same banks, the resulting impact as of June 29, 2024 and March 30, 2024 would be as follows (in millions):
|  |  | Net Investment Hedges |  |  |  |
|  |  |  |  | June 29, 2024 |  | March 30, 2024 |  |  |  |  |  |  |  |
Assets subject to master netting arrangements |  |  |  |  | $ | 23 |  |  | $ | 12 |  |  |  |  |  |  |  |  |
Liabilities subject to master netting arrangements |  |  |  |  | $ | 125 |  |  | $ | 88 |  |  |  |  |  |  |  |  |
Derivative assets, net |  |  |  |  | $ | 16 |  |  | $ | 8 |  |  |  |  |  |  |  |  |
Derivative liabilities, net |  |  |  |  | $ | 118 |  |  | $ | 84 |  |  |  |  |  |  |  |  |
Currently, the Company’s master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. The following table summarizes the pre-tax impact of the losses on the Company’s designated net investment hedges and fair value hedges (in millions):
|  |  | Three Months Ended
|  |  |  |  | June 29, 2024 |  | July 1, 2023
|  |  |  |  | Pre-Tax Losses Recognized in OCI |  | Pre-Tax Losses Recognized in OCI
Designated net investment hedges |  |  |  |  | $ | (26) |  |  | $ | (54) |
Designated fair value hedge |  |  |  |  | $ | — |  |  | $ | (25) |
The following tables summarize the pre-tax impact of the gains within the consolidated statements of operations and comprehensive (loss) income related to the designated forward foreign currency exchange contracts for the three months ended June 29, 2024 and July 1, 2023 (in millions):
| Three Months Ended
| Pre-Tax Gain Reclassified from Accumulated OCI |  | Location of Gain Recognized
| June 29, 2024 |  | July 1, 2023 |
Designated forward foreign currency exchange contracts | $ | — |  |  | $ | 3 |  |  | Cost of goods sold
See Note 18 for additional information regarding derivative activity subsequent to June 29, 2024.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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