Note

13:

Financial Instruments

Overview

As a result of being a global enterprise, our earnings, cash flows and financial position are exposed to foreign currency risk from foreign currency denominated receivables and payables.

We use foreign currency forward contracts, cross-currency swaps, and interest rate swaps to manage risks associated with foreign currency exchange rates and interest rates. We do

not

hold derivative financial instruments of a speculative nature or for trading purposes. We record derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is

longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings.

We are exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. We select investment-grade multinational banks and financial institutions as counterparties for derivative transactions and monitor the credit quality of each of these banks on a periodic basis as warranted. We do

not

anticipate nonperformance by any of these counterparties, and valuation allowances, if any, are de minimis.

Cash Flow Hedges

Effective

October 20, 2017,

we entered into

six

cross-currency swap agreements to convert a notional amount of

$401,200

of foreign currency denominated intercompany loans into U.S. dollars. The swaps mature in

2021

and

2022.

Effective

February 24, 2017,

we entered into a cross-currency swap agreement to convert a notional amount of

$42,600

of foreign currency denominated intercompany loans into U.S. dollars. The swap matures in

2020.

Effective

October 7, 2015,

we entered into

three

cross-currency swap agreements to convert a notional amount of

$134,736

of foreign currency denominated intercompany loans into US dollars. The

first

swap matured in

2017,

the

second

swap matures in

2018

and the

third

swap matures in

2019.

As of

September 1, 2018,

the combined fair value of the swaps was a liability of

$14,288

and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated as cash flow hedges for accounting treatment. The lesser amount between the cumulative change in the fair value of the actual swaps and the cumulative change in the fair value of hypothetical swaps is recorded in accumulated other comprehensive income (loss) in the Consolidated Balance Sheets. The difference between the cumulative change in the fair value of the actual swaps and the cumulative change in the fair value of hypothetical swaps are recorded as other income (expense), net in the Condensed Consolidated Statements of Income. In a perfectly effective hedge relationship, the

two

fair value calculations would exactly offset each other. Any difference in the calculation represents hedge ineffectiveness. The amount in accumulated other comprehensive income (loss) related to cross-currency swaps was a loss of

$13,390

as of

September 1, 2018.

The estimated net amount of the existing loss that is reported in accumulated other comprehensive income (loss) as of

September 1, 2018

that is expected to be reclassified into earnings within the next

twelve

months is

$2,741.

As of

September 1, 2018,

we do

not

believe any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will

not

occur.

The following table summarizes the cross-currency swaps outstanding as of

September 1, 2018:

	Fiscal Year of Expiration	Interest Rate		Notional Value		Fair Value
Pay EUR	2018		3.45%	$	44,912	$	(1,574	)
Receive USD			4.5374%

Pay EUR	2019		3.80%	$	44,912	$	(2,510	)
Receive USD			5.0530%

Pay EUR	2020		1.95%	$	42,600	$	(4,769	)
Receive USD			4.3038%

Pay EUR	2021		2.75%	$	133,340	$	(1,415	)
Receive USD			4.9330%

Pay EUR	2022		3.00%	$	267,860	$	(4,020	)
Receive USD			5.1803%
Total				$	533,624	$	(14,288	)

March 26, 2018,

we entered into interest rate swap agreements to convert

$200,000

of our

$2,150,000

Term Loan B to a fixed interest rate of

4.176

percent. On

March 9, 2018,

we entered into an interest rate swap agreement to convert

$100,000

of our

$2,150,000

Term Loan B to a fixed interest rate of

4.490

percent. On

February 27, 2018,

we entered into an interest rate swap agreement to convert

$200,000

of our

$2,150,000

Term Loan B to a fixed interest rate of

4.589

percent. On

October 20, 2017,

we entered into interest rate swap agreements to convert

$1,050,000

of our

$2,150,000

Term Loan B issued on

October 20, 2017

to a fixed interest rate of

4.0275

percent. The combined fair value of the interest rate swaps in total was an asset of

$28,012

September 1, 2018

and was included in other assets in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as cash flow hedges. We are applying the shortcut method in accounting for these interest rate swaps as we expect changes in the cash flows of the interest rate swap to offset the changes in cash flows (i.e. changes in interest rate payments) attributable to fluctuations in LIBOR rates on the interest payments associated with the

first

$1,550,000

tranche of the variable rate Term Loan B, resulting in

ineffectiveness.

April 23, 2018,

we amended our Term Loan B Credit Agreement to reduce the interest rate from LIBOR plus

2.25

percent to LIBOR plus

2.00

percent. Fixed interest rates related to swap agreements disclosed have been updated to reflect the amendment.

The amounts of pretax gains (losses) recognized in Comprehensive Income related to derivative instruments designated as cash flow hedges are as follows:

	Nine Months Ended
	September 1, 2018			September 2, 2017
	Amount			Amount
Cross-currency swap contracts	$	(5,606	)	$	11
Interest rate swap contracts		24,918			48

Fair Value Hedges

On February 14, 2017,

we entered into interest rate swap agreements to convert

$150,000

of our

$300,000

Public Notes that were issued on

February 14, 2017

to a variable interest rate of

-month LIBOR plus

1.86

percent. The combined fair value of the interest rate swaps in total was a liability of

$8,295

September 1, 2018,

and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. We are applying the shortcut method in accounting for these interest rate swaps as we expect that the changes in the fair value of the swap will offset the changes in the fair value of the Public Notes resulting in

ineffectiveness. As a result of applying the shortcut method, the change in the fair value of the interest rate swap and an equivalent amount for the change in the fair value of the debt will be reflected in other income (expense), net and

ineffectiveness will be recognized in our Consolidated Statements of Income.

Derivatives

Not

Designated As Hedging Instruments

The company uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries that are remeasured at the end of each period. Although the contracts are effective economic hedges, they are

not

designated as accounting hedges. Foreign currency forward contracts are recorded as assets and liabilities on the balance sheet at fair value. Changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities.

See Note

for fair value amounts of these derivative instruments.

As of

September 1, 2018,

we had forward foreign currency contracts maturing between

September 4, 2018

and

April 15, 2019.

The mark-to-market effect associated with these contracts was largely offset by the underlying transaction gains and losses resulting from the foreign currency exposures for which these contracts relate.

The amounts of pretax gains (losses) recognized in other (expense) income, net related to derivative instruments

not

designated as hedging instruments are as follows:

	Nine Months Ended
	September 1, 2018		September 2, 2017
Foreign currency forward contracts	$	10,520	$	(1,606	)

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities in the customer base and their dispersion across many different industries and countries. As of

September 1, 2018,

there were

significant concentrations of credit risk.