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FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES | 3 Months Ended
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Jan. 03, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES | FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES As part of the Company’s overall risk management practices, the Company enters into financial derivatives to manage its financial exposures to foreign currency exchange rates and interest rates. The Company records all derivatives on the Condensed Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. A qualitative assessment of hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate the hedge may no longer be highly effective, in which case the Company would test for effectiveness on a more frequent basis. The changes in fair value for all trades that are not designated for hedge accounting are recognized in current period income. The Company does not offset fair value amounts recognized for derivative instruments in its Condensed Consolidated Balance Sheets for presentation purposes. Credit risk related to derivative transactions reflects the risk that a party to the transaction could fail to meet its obligation under the derivative contracts. Therefore, the Company’s exposure to the counterparty’s credit risk is generally limited to the amounts, if any, by which the counterparty’s obligations to the Company exceed the Company’s obligations to the counterparty. The Company’s policy is to enter into contracts only with financial institutions that meet certain minimum credit ratings to help mitigate counterparty credit risk. Derivatives Designated as Hedging Instruments - Net Investment Hedges The Company uses cross currency swap contracts as net investment hedges to manage its risk of variability in foreign currency-denominated net investments in wholly-owned international operations. All changes in fair value of the derivatives designated as net investment hedges are reported in accumulated other comprehensive loss along with the foreign currency translation adjustments on those investments. As of January 3, 2025, the Company had the following outstanding derivatives designated as net investment hedging instruments:
(In millions, except number of instruments) | Number of Instruments |  | Notional Value
Cross currency swap contracts | 2 |  | $ | 58.7 |
The following table summarizes the amount of pre-tax income recognized from derivative instruments for the periods indicated and the line items in the accompanying statements of operations where the results are recorded for net investment hedges:
| Amount of Gain (Loss) Recognized in OCI on Derivative Three Months Ended |  | Location of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) |  | Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) Three Months Ended
(In millions) | January 3, 2025 |  | December 29, 2023 |  |  | January 3, 2025 |  | December 29, 2023
Cross currency swap contracts | $ | 4.8 |  |  | $ | (2.7) |  |  | Interest expense |  | $ | 0.2 |  |  | $ | 0.3 |
These derivative instruments are subject to master netting agreements giving effect to rights of offset with each counterparty. None of the balances were eligible for netting. The following table summarizes the gross fair values of derivative instruments as of the periods indicated and the line items in the accompanying Condensed Consolidated Balance Sheets where the instruments are recorded:
(In millions) |  |  |  | Derivative Assets and Liabilities
Derivatives Designated as Net Investment Hedges |  | Balance Sheet Location |  | January 3, 2025 |  | September 27, 2024
Cross currency swap contracts |  | Prepaid expenses and other current assets |  | $ | — |  |  | $ | 1.0 |
Cross currency swap contracts |  | Accrued liabilities and other current liabilities |  | 3.1 |  |  | — |
Cross currency swap contracts |  | Other long-term liabilities |  | $ | — |  |  | $ | 8.6 |
Balance Sheet Hedges The Company also enters into foreign currency forward contracts to hedge fluctuations associated with foreign currency-denominated monetary assets and liabilities, primarily cash, lease contracts, third-party accounts receivable and payable, and intercompany accounts receivable and payable. These forward contracts are generally entered into during one fiscal period and expire during the following fiscal period. These forward contracts are not designated for hedge accounting treatment; therefore, the change in fair value of these derivatives is recorded as a component of other (expense) income, net in the Condensed Consolidated Statements of Operations and offsets the change in fair value of the foreign currency-denominated assets and liabilities, which are also recorded as a component of other (expense) income, net. The Company has not and does not intend to use derivative financial instruments for speculative or trading purposes. The following table shows the notional amounts of outstanding foreign currency contracts as of January 3, 2025:
|  | Notional Value of Derivatives not Designated as Hedging Instruments:
(In millions of equivalent USD) |  | Buy Contracts |  | Sell Contracts
Australian Dollar |  | $ | — |  |  | $ | 1.9 |
Chinese Renminbi |  | — |  |  | 39.0 |
Euro |  | — |  |  | 26.1 |
Indian Rupee |  | 5.2 |  |  | — |
Mexican Peso |  | — |  |  | 1.2 |
Philippine Peso |  | 7.3 |  |  | — |
Swiss Franc |  | 3.0 |  |  | — |
Total notional value |  | $ | 15.5 |  |  | $ | 68.2 |

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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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