FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

12 Months Ended

Sep. 27, 2025

Financial Instruments and Concentration of Credit Risk

Fair Value Measurements

Fair Value of Financial Instruments

The fair values of cash equivalents (representing 21% of cash and cash equivalents), restricted cash equivalents, accounts receivable, accounts payable and short-term debt approximate carrying value due to the short-term duration of these instruments. Additionally, the fair value of variable rate long-term debt approximates carrying value as of September 27, 2025. The Company’s cash equivalents are classified as Level 1 in the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company’s deferred compensation plan and defined benefit plan assets are measured at fair value using Level 1 inputs on a recurring basis. See Note 15 “Employee Benefit Plans” of the notes to the Consolidated Financial Statements contained in this report for details on defined benefit plan assets. In 2025, the Company liquidated $49 million of investments held in a former rabbi trust for its deferred compensation plan assets. These funds were reinvested in other types of investments as of September 27, 2025, with $40 million recorded in prepaid expenses and other current assets as restricted cash equivalent and $10 million recorded in other assets on the consolidated balance sheets. As of September 28, 2024, assets associated with the deferred compensation plan were $47 million and recorded in other assets on the consolidated balance sheets. Liabilities associated with the deferred compensation plan were $54 million and $47 million as of September 27, 2025 and September 28, 2024, respectively, and recorded in other liabilities on the consolidated balance sheets.

The Company also measures fair value of foreign exchange contracts, interest rate swap agreements and TRS on a recurring basis. Interest rate swaps are valued based on a discounted cash flow analysis that incorporates observable market inputs such as interest rate yield curves and credit spreads. The TRS is measured at fair value using quoted prices of the underlying investments. For currency contracts, inputs include foreign currency spot and forward rates and interest rates at commonly quoted intervals.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Other non-financial assets, such as goodwill and other long-lived assets, are measured at fair value as of the date such assets are acquired or in the period an impairment is recorded.

Offsetting Derivative Assets and Liabilities

The Company has entered into master netting arrangements with each of its derivative counterparties that allows net settlement of derivative assets and liabilities under certain conditions, such as multiple transactions with the same currency maturing on the same date. The Company presents its derivative assets and derivative liabilities on a gross basis on the consolidated balance sheets.

The following table presents the location and fair value of derivative financial instruments included in our consolidated balance sheets as of September 27, 2025.


	Fair Value Measurements Using Level 1, Level 2, or Level 3	Prepaid Expenses and Other Current Assets		Other Assets		Accrued Liabilities		Other Liabilities
		(In thousands)
Derivatives designated as accounting hedges: foreign currency forward contracts	Level 2	$	74	$	—	$	21	$	—
Derivatives not designated as accounting hedges: foreign currency forward contracts	Level 2	$	4,352	$	—	$	622	$	—
Derivatives designated as accounting hedges: interest rate swaps	Level 2	$	1,156	$	108	$	—	$	446
Derivative not designated as accounting hedge: total return swap	Level 2	$	973	$	—	$	—	$	—

The following table presents the location and fair value of derivative financial instruments included in our consolidated balance sheets as of September 28, 2024.


	Fair Value Measurements Using Level 1, Level 2, or Level 3	Prepaid Expenses and Other Current Assets		Other Assets		Accrued Liabilities		Other Liabilities
		(In thousands)
Derivatives designated as accounting hedges: foreign currency forward contracts	Level 2	$	759	$	—	$	53	$	—
Derivatives not designated as accounting hedges: foreign currency forward contracts	Level 2	$	3,229	$	—	$	2,265	$	—
Derivatives designated as accounting hedges: interest rate swaps	Level 2	$	1,518	$	21	$	—	$	1,771

Derivative Instruments

The Company had the following outstanding derivative contracts that were entered into to hedge foreign currency, interest rate and deferred compensation plan liability exposures:


	As of
	September 27, 2025		September 28, 2024
	(in thousands, except number of contracts)
Foreign Currency Forward Contracts:
Derivatives Designated as Accounting Hedges:
Notional amount	$	131,061	$	117,015
Number of contracts	45		47
Derivatives Not Designated as Accounting Hedges:
Notional amount	$	490,506	$	366,425
Number of contracts	42		38
Interest Rate Swaps:
Derivatives Designated as Accounting Hedges:
Notional amount	$	300,000	$	300,000
Number of contracts	6		6
Total Return Swap:
Derivatives Not Designated as Accounting Hedges:
Notional amount	$	54,298	$	—
Number of contracts	1		—

Foreign Currency Forward Contracts

The Company is exposed to certain risks related to its ongoing business operations. The primary risk managed by using derivative instruments is foreign currency exchange risk.

Forward contracts on various foreign currencies are used to manage foreign currency risk associated with forecasted foreign currency transactions and certain monetary assets and liabilities denominated in non-functional currencies. The Company’s primary foreign currency cash flows are in India, Mexico and China.

The Company utilizes foreign currency forward contracts to hedge certain operational (“cash flow”) exposures resulting from changes in foreign currency exchange rates. Such exposures generally result from (1) forecasted non-functional currency sales and (2) forecasted non-functional currency materials, labor, overhead and other expenses. These contracts are designated as cash flow hedges for accounting purposes and are generally one to two months in duration but, by policy, may be up to twelve months in duration. The amount of gain or loss recognized in other comprehensive income on derivative instruments and the amount of gain or loss reclassified from AOCI into income were not material for any period presented herein and is included as a component of cost of sales in the consolidated statements of income.

The Company enters into short-term foreign currency forward contracts to hedge foreign currency exposures associated with certain monetary assets and liabilities denominated in non-functional currencies. These contracts have maturities of up to two months and are not designated as accounting hedges. Accordingly, these contracts are marked-to-market at the end of each period with unrealized gains and losses recorded in other income (expense), net, in the consolidated statements of income. The amount of gains or losses associated with these forward contracts was not material for any period presented herein. From an economic perspective, the objective of the Company’s hedging program is for gains and losses on forward contracts to substantially offset gains and losses on the underlying hedged items. In addition to the contracts disclosed in the table above, the Company has numerous contracts that have been closed from an economic and financial accounting perspective and will settle early in the first month of the following quarter. Since these offsetting contracts do not expose the Company to risk of fluctuations in exchange rates, these contracts have been excluded from the above table.

Interest Rate Swaps

The Company enters into forward interest rate swap agreements with independent counterparties to partially hedge the variability in cash flows due to changes in Secured Overnight Financing Rate benchmark interest rate (“SOFR”) associated with anticipated variable rate borrowings. These interest rate swaps have a maturity date of September 27, 2027 and effectively convert a portion of the Company’s variable interest rate obligations to fixed interest rate obligations. These swaps are accounted for as cash flow hedges under ASC Topic 815, Derivatives and Hedging. The aggregate effective interest rate of these swaps as of September 27, 2025 was approximately 4.7%.

Subsequent to the fourth quarter of 2025, the Company entered into forward interest rate swap agreements with independent counterparties with an aggregate notional amount of $1.2 billion and a maturity date of October 31, 2030, effectively convert a portion of the Company’s variable interest rate obligations under the Credit Facilities to fixed interest rate obligations.

Total Return Swap

In the second quarter of fiscal 2025, the Company entered into a TRS to substantially offset changes in the deferred compensation plan liabilities resulting from changes in the value of investment elections made by participants. The Company elected not to designate the TRS as an accounting hedge and recognized the changes in fair value of the derivative instrument, as well as the offsetting change in the fair value of the hedged item, in cost of sales, and selling, general and administrative expense in the consolidated statements of income.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist primarily of cash, cash equivalents, restricted cash equivalents and trade accounts receivable. The Company maintains its cash and cash equivalents, and restricted cash equivalents with recognized financial institutions, both domestic and foreign. Cash and cash equivalents, and restricted cash equivalents may exceed the amount of insurance provided on such deposits, but may generally be redeemed upon demand. Periodic evaluations of the relative credit standing of the financial institutions are performed and the Company attempts to limit its exposure with any one institution. One of the Company’s most significant credit risks is the ultimate realization of accounts receivable. This risk is mitigated by ongoing credit evaluations of, and frequent contact with, the Company’s customers, especially its most significant customers, thus enabling it to monitor changes in business operations and respond accordingly. The Company generally does not require collateral for sales on credit. The Company considers these concentrations of credit risks when estimating its allowance for doubtful accounts. Foreign currency forward contracts, TRS and interest rate swaps are maintained with high quality counterparties to reduce the Company’s credit risk and are recorded on the Company’s balance sheets at fair value.

Two customers represented 10% or more of the Company’s gross accounts receivable as of September 27, 2025. One customer represented 10% or more of the Company’s gross accounts receivable as of September 28, 2024.