XML 27 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Derivative Instruments and Hedging Activities
 12 Months Ended
Nov. 26, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company's foreign currency management objective is to minimize the effect of fluctuations in foreign exchange rates on nonfunctional currency cash flows and selected assets or liabilities without exposing the Company to additional risk associated with transactions that could be regarded as speculative. Forward exchange contracts on various currencies are entered into to manage foreign currency exposures associated with certain product sourcing activities, some intercompany sales, foreign subsidiaries' royalty payments, interest payments, earnings repatriations, net investment in foreign operations and funding activities. The Company manages certain forecasted foreign currency exposures and uses a centralized currency management operation to take advantage of potential opportunities to naturally offset foreign currency exposures against each other. The Company had designated a portion of its outstanding Euro-denominated senior notes as a net investment hedge to manage foreign currency exposures in its foreign operations. The Company does not apply hedge accounting to its derivative transactions. As of November 26, 2017, the Company had forward foreign exchange contracts to buy $769.1 million and to sell $213.2 million against various foreign currencies. These contracts are at various exchange rates and expire at various dates through February 2019.
The table below provides data about the carrying values of derivative instruments and non-derivative instruments:
 
November 26, 2017
 
November 27, 2016
 
Assets
 
(Liabilities)
 
Derivative Net Carrying Value
 
Assets
 
(Liabilities)
 
Derivative Net Carrying Value
 
Carrying
Value
 
Carrying
Value
 
 
Carrying
Value
 
Carrying
Value
 
 
(Dollars in thousands)
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
Forward foreign exchange contracts(1)
$
3,403

 
$
(253
)
 
$
3,150

 
$
30,160

 
$
(6,893
)
 
$
23,267

Forward foreign exchange contracts(2)
2,893

 
(23,546
)
 
(20,653
)
 
1,481

 
(7,014
)
 
(5,533
)
Total
$
6,296

 
$
(23,799
)
 
 
 
$
31,641

 
$
(13,907
)
 
 
Non-derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
Euro senior notes

$
—

 
$
(562,780
)
 
 
 
$
—

 
$
—

 
 

_____________
(1)
Included in "Other current assets" or "Other non-current assets" on the Company’s consolidated balance sheets.
(2)
Included in "Other accrued liabilities" or "Other long-term liabilities" on the Company’s consolidated balance sheets.
The Company's over-the-counter forward foreign exchange contracts are subject to International Swaps and Derivatives Association, Inc. master agreements. These agreements permit the net-settlement of these contracts on a per-institution basis and are presented accordingly. The table below presents the gross and net amounts of these contracts recognized on the Company's consolidated balance sheets by type of financial instrument:
 
 
November 26, 2017
 
November 27, 2016
 
 
Gross Amounts of Recognized Assets / (Liabilities)
 
Gross Amounts Offset in the Balance Sheet
 
Net Amount of Assets / (Liabilities) Presented in the Balance Sheet
Gross Amounts of Recognized Assets / (Liabilities)
 
Gross Amounts Offset in the Balance Sheet
 
Net Amount of Assets / (Liabilities) Presented in the Balance Sheet
 
 
 
(Dollars in thousands)
 
Over-the-counter forward foreign exchange contracts
 
 
 
 
 
 
 
 
 
 
 
 
Financial assets
$
3,218

 
$
(3,146
)
 
$
72

 
$
29,240

 
$
(8,374
)
 
$
20,866

 
Financial liabilities
(20,876
)
 
3,146

 
(17,730
)
 
(10,365
)
 
8,374

 
(1,991
)
 
Total
 
 
 
 
$
(17,658
)
 
 
 
 
 
$
18,875

 
Embedded derivative contracts
 
 
 
 
 
 
 
 
 
 
 
 
Financial assets
$
3,078

 
$
—

 
$
3,078

 
$
2,401

 
$
—

 
$
2,401

 
Financial liabilities
(2,923
)
 
—

 
(2,923
)
 
(3,542
)
 
—

 
(3,542
)
 
Total
 
 
 
 
$
155

 
 
 
 
 
$
(1,141
)

The table below provides data about the amount of gains and losses related to derivative instruments and non-derivative instruments designated as net investment hedges included in "Accumulated other comprehensive loss" ("AOCI") on the Company’s consolidated balance sheets, and in "Other income (expense), net" in the Company’s consolidated statements of income:
 
Gain or (Loss)
Recognized in AOCI
(Effective Portion)
 
Gain or (Loss) Recognized in Other Income (Expense), Net (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
As of
 
As of
 
Year Ended
November 26,
2017
November 27,
2016
November 26,
2017
 
November 27,
2016
 
November 29,
2015
 
(Dollars in thousands)
Forward foreign exchange contracts
$
4,637

 
$
4,637

 


 


 


Yen-denominated Eurobonds
(19,811
)
 
(19,811
)
 
$
—

 
$
2,627

 
$
965

Euro-denominated senior notes
(75,697
)
 
(15,751
)
 
—

 
—

 
—

Cumulative income taxes
35,253

 
12,168

 


 
 
 
 
Total
$
(55,618
)
 
$
(18,757
)
 
 
 
 
 
 

The table below provides data about the amount of gains and losses related to derivatives not designated as hedging instruments included in "Other income (expense), net" in the Company’s consolidated statements of income:
 
Year Ended
 
November 26,
2017
 
November 27,
2016
 
November 29,
2015
 
(Dollars in thousands)
Forward foreign exchange contracts:
 
 
 
 
 
Realized (loss) gain
$
(5,773
)
 
$
17,175

 
$
14,720

Unrealized loss (1)
(35,394
)
 
(1,315
)
 
19,386

Total
$
(41,167
)
 
$
15,860

 
$
34,106

_____________
(1)
The unrealized loss in 2017 is primarily driven by losses on contracts to sell the Mexican Peso, the Euro and the British Pound, as a result of the USD weakening at year end.