XML 37 R19.htm IDEA: XBRL DOCUMENT
v3.19.3

DERIVATIVES AND FAIR VALUE MEASUREMENTS | 6 Months Ended
--- | ---
Sep. 28, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES AND FAIR VALUE MEASUREMENTS | 13. DERIVATIVES AND FAIR VALUE MEASUREMENTS The Company manufactures, markets and sells its products globally. During the three and six months ended September 28, 2019, 35.9% and 35.2%, respectively, of the Company's sales were generated outside the U.S., generally in foreign currencies. The Company also incurs certain manufacturing, marketing and selling costs in international markets in local currency. Accordingly, earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates relative to the U.S. Dollar, the Company's reporting currency. The Company has a program in place that is designed to mitigate the exposure to changes in foreign currency exchange rates. That program includes the use of derivative financial instruments to minimize, for a period of time, the impact on its financial results from changes in foreign exchange rates. The Company utilizes foreign currency forward contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily the Japanese Yen and the Euro, and to a lesser extent the Swiss Franc, Australian Dollar, Canadian Dollar and the Mexican Peso. This does not eliminate the impact of the volatility of foreign exchange rates. However, because the Company generally enters into forward contracts one year out, rates are fixed for a one-year period, thereby facilitating financial planning and resource allocation. Designated Foreign Currency Hedge Contracts All of the Company's designated foreign currency hedge contracts as of September 28, 2019 and March 30, 2019 were cash flow hedges under ASC 815, Derivatives and Hedging ("ASC 815"). The Company records the effective portion of any change in the fair value of designated foreign currency hedge contracts in other comprehensive income until the related third-party transaction occurs. Once the related third-party transaction occurs, the Company reclassifies the effective portion of any related gain or loss on the designated foreign currency hedge contracts to earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, the Company would reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. The Company had designated foreign currency hedge contracts outstanding in the contract amount of $42.0 million as of September 28, 2019 and $81.5 million as of March 30, 2019. At September 28, 2019, a gain of $1.5 million, net of tax, will be reclassified to earnings within the next twelve months. Substantially all currency cash flow hedges outstanding as of September 28, 2019 mature within twelve months. Non-Designated Foreign Currency Contracts The Company manages its exposure to changes in foreign currency on a consolidated basis to take advantage of offsetting transactions and balances. It uses foreign currency forward contracts as a part of its strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These foreign currency forward contracts are entered into for periods consistent with currency transaction exposures, generally one month. They are not designated as cash flow or fair value hedges under ASC 815. These forward contracts are marked-to-market with changes in fair value recorded to earnings. The Company had non-designated foreign currency hedge contracts under ASC 815 outstanding in the contract amount of $81.5 million as of September 28, 2019 and $37.4 million as of March 30, 2019. Interest Rate Swaps On June 15, 2018, the Company entered into Credit Facilities which provided for a $350.0 million Term Loan and a $350.0 million Revolving Credit Facility. Under the terms of the Credit Facilities, interest is established using LIBOR plus 1.13% - 1.75%. As a result, the Company's earnings and cash flows are exposed to interest rate risk from changes to LIBOR. Part of the Company's interest rate risk management strategy includes the use of interest rate swaps to mitigate its exposure to changes in variable interest rates. The Company's objective in using interest rate swaps is to add stability to interest expense and to manage and reduce the risk inherent in interest rate fluctuations. In August 2018, the Company entered into two interest rate swap agreements (the "Swaps") to pay an average fixed rate of 2.80% on a total notional value of $241.9 million of debt. As a result of the Swaps, 70% of the Term Loan previously exposed to interest rate risk from changes in LIBOR is now fixed at a rate of 4.05%. The Swaps mature on June 15, 2023. The Company designated the Swaps as cash flow hedges of variable interest rate risk associated with $332.5 million of indebtedness. For the six months ended September 28, 2019, a loss of $5.4 million, net of tax, was recorded in accumulated other comprehensive loss to recognize the effective portion of the fair value of the Swaps that qualify as cash flow hedges. Fair Value of Derivative Instruments The following table presents the effect of the Company's derivative instruments designated as cash flow hedges and those not designated as hedging instruments under ASC 815 in its condensed consolidated statements of income and comprehensive income for the six months ended September 28, 2019:
(In thousands) |  | Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss |  | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings |  | Location in Condensed Consolidated Statements of Income and Comprehensive Income |  | Amount of Gain Excluded from Effectiveness Testing |  | Location in Condensed Consolidated Statements of Income and Comprehensive Income
Designated foreign currency hedge contracts, net of tax |  | $ | 1,455 |  |  | $ | 241 |  |  | Net revenues, COGS and SG&A |  | $ | 474 |  |  | Interest and other expense, net
Non-designated foreign currency hedge contracts |  | — |  |  | — |  |  |  |  | $ | 219 |  |  | Interest and other expense, net
Designated interest rate swaps, net of tax |  | $ | (5,369 | ) |  | $ | (398 | ) |  | Interest and other expense, net |  | $ | — |  |  |
The Company did not have fair value hedges or net investment hedges outstanding as of September 28, 2019 or March 30, 2019. As of September 28, 2019, no deferred tax assets were recognized for designated foreign currency hedges. ASC 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. The Company determines the fair value of its derivative instruments using the framework prescribed by ASC 820, Fair Value Measurements and Disclosures, by considering the estimated amount it would receive or pay to sell or transfer these instruments at the reporting date and by taking into account current interest rates, currency exchange rates, current interest rate curves, interest rate volatilities, the creditworthiness of the counterparty for assets, and its creditworthiness for liabilities. In certain instances, the Company may utilize financial models to measure fair value. Generally, it uses inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of September 28, 2019, the Company has classified its derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of its derivative instruments. The following tables present the fair value of the Company's derivative instruments as they appear in its condensed consolidated balance sheets as of September 28, 2019 and March 30, 2019:
(In thousands) |  | Location in Condensed Consolidated Balance Sheets |  | As of |  | As of
|  | September 28, 2019 |  | March 30, 2019
Derivative Assets: |  |  |  |  |  |
Designated foreign currency hedge contracts |  | Other current assets |  | $ | 997 |  |  | $ | 1,208 |
Non-designated foreign currency hedge contracts |  | Other current assets |  | 34 |  |  | 69 |
|  |  |  | $ | 1,031 |  |  | $ | 1,277 |
Derivative Liabilities: |  |  |  |  |  |
Designated foreign currency hedge contracts |  | Other current liabilities |  | $ | 142 |  |  | $ | 145 |
Non-designated foreign currency hedge contracts |  | Other current liabilities |  | 172 |  |  | — |
Designated interest rate swaps |  | Other current liabilities |  | 10,114 |  |  | 5,203 |
|  |  |  | $ | 10,428 |  |  | $ | 5,348 |
Other Fair Value Measurements Fair value is defined as the exit price that would be received from the sale of an asset or paid to transfer a liability, using assumptions that market participants would use in pricing an asset or liability. The fair value guidance establishes the following three-level hierarchy used for measuring fair value:
• | Level 1 — Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.
• | Level 2 — Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.
• | Level 3 — Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.
The Company's money market funds carried at fair value are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. Fair Value Measured on a Recurring Basis Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of September 28, 2019 and March 30, 2019.
|  | As of September 28, 2019
(In thousands) |  | Level 1 |  | Level 2 |  | Total
Assets |  |  |  |  |  |
Money market funds |  | $ | 33,834 |  |  | $ | — |  |  | $ | 33,834 |
Designated foreign currency hedge contracts |  | — |  |  | 997 |  |  | 997 |
Non-designated foreign currency hedge contracts |  | — |  |  | 34 |  |  | 34 |
|  | $ | 33,834 |  |  | $ | 1,031 |  |  | $ | 34,865 |
Liabilities |  |  |  |  |  |
Designated foreign currency hedge contracts |  | $ | — |  |  | $ | 142 |  |  | $ | 142 |
Non-designated foreign currency hedge contracts |  | — |  |  | 172 |  |  | 172 |
Designated interest rate swaps |  | — |  |  | 10,114 |  |  | 10,114 |
|  | $ | — |  |  | $ | 10,428 |  |  | $ | 10,428 |
|  | As of March 30, 2019
|  | Level 1 |  | Level 2 |  | Total
Assets |  |  |  |  |  |
Money market funds |  | $ | 36,980 |  |  | $ | — |  |  | $ | 36,980 |
Designated foreign currency hedge contracts |  | — |  |  | 1,208 |  |  | 1,208 |
Non-designated foreign currency hedge contracts |  | — |  |  | 69 |  |  | 69 |
|  | $ | 36,980 |  |  | $ | 1,277 |  |  | $ | 38,257 |
Liabilities |  |  |  |  |  |  |  |  |
Designated foreign currency hedge contracts |  | $ | — |  |  | $ | 145 |  |  | $ | 145 |
Designated interest rate swaps |  | $ | — |  |  | $ | 5,203 |  |  | $ | 5,203 |
|  | $ | — |  |  | $ | 5,348 |  |  | $ | 5,348 |
Other Fair Value Disclosures The Term Loan, which is carried at amortized cost, accounts receivable and accounts payable approximate fair value.

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 derivatives and fair value of assets and liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 Reference 2: 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_DerivativesAndFairValueTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration