| DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
| NOTE 3: |
DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES |
As of February 26, 2017, the Company had forward foreign
exchange contracts to buy $1.2 billion and to sell
$327.5 million against various foreign currencies. These
contracts are at various exchange rates and expire at various dates
through August 2018.
The table below provides data about the carrying values of
derivative instruments and non-derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
February 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)
|
|
$ |
17,002 |
|
|
$ |
(7,556 |
) |
|
$ |
9,446 |
|
|
$ |
30,160 |
|
|
$ |
(6,893 |
) |
|
$ |
23,267 |
|
|
Forward foreign exchange contracts(2)
|
|
|
4,614 |
|
|
|
(15,457 |
) |
|
|
(10,843 |
) |
|
|
1,481 |
|
|
|
(7,014 |
) |
|
|
(5,533 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
21,616 |
|
|
$ |
(23,013 |
) |
|
|
|
|
|
$ |
31,641 |
|
|
$ |
(13,907 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Included in “Other current
assets” or “Other non-current assets” on the
Company’s consolidated balance sheets. |
| (2) |
Included in “Other accrued
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 offset
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
February 26, 2017 |
|
|
November 27, 2016 |
|
| |
|
Gross
Amounts of
Recognized
Assets /
(Liabilities) |
|
|
Gross
Amounts
Offset in the
Statement
of Financial
Position |
|
|
Net Amounts
of Assets /
(Liabilities)
Presented in
the Statement
of Financial
Position |
|
|
Gross
Amounts of
Recognized
Assets /
(Liabilities) |
|
|
Gross
Amounts
Offset in the
Statement of
Financial
Position |
|
|
Net Amounts
of Assets /
(Liabilities)
Presented in
the Statement
of Financial
Position |
|
| |
|
(Dollars in
thousands) |
|
|
Over-the-counter forward
foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
$ |
16,847 |
|
|
$ |
(12,169 |
) |
|
$ |
4,678 |
|
|
$ |
29,240 |
|
|
$ |
(8,374 |
) |
|
$ |
20,866 |
|
|
Financial liabilities
|
|
|
(19,679 |
) |
|
|
12,169 |
|
|
|
(7,510 |
) |
|
|
(10,365 |
) |
|
|
8,374 |
|
|
|
(1,991 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$ |
(2,832 |
) |
|
|
|
|
|
|
|
|
|
$ |
18,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded derivative contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
$ |
4,768 |
|
|
$ |
— |
|
|
$ |
4,768 |
|
|
$ |
2,401 |
|
|
$ |
— |
|
|
$ |
2,401 |
|
|
Financial liabilities
|
|
|
(3,333 |
) |
|
|
— |
|
|
|
(3,333 |
) |
|
|
(3,542 |
) |
|
|
— |
|
|
|
(3,542 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$ |
1,435 |
|
|
|
|
|
|
|
|
|
|
$ |
(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 |
|
|
Three Months Ended |
|
| |
February 26,
2017 |
|
|
November 27,
2016 |
|
|
February 26,
2017 |
|
|
February 28,
2016 |
|
| |
|
(Dollars in
thousands) |
|
|
Forward foreign exchange contracts
|
|
$ |
4,637 |
|
|
$ |
4,637 |
|
|
|
|
|
|
|
|
|
|
Yen-denominated
Eurobonds
|
|
|
(19,811 |
) |
|
|
(19,811 |
) |
|
$ |
— |
|
|
$ |
(2,103 |
) |
|
Euro senior notes
|
|
|
(15,751 |
) |
|
|
(15,751 |
) |
|
|
|
|
|
|
|
|
|
Cumulative income taxes
|
|
|
12,168 |
|
|
|
12,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
(18,757 |
) |
|
$ |
(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:
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
February 26,
2017 |
|
|
February 28,
2016 |
|
|
Forward foreign exchange contracts:
|
|
|
|
|
|
|
|
|
|
Realized gain
|
|
$ |
9,076 |
|
|
$ |
12,967 |
|
|
Unrealized loss
|
|
|
(19,320 |
) |
|
|
(9,231 |
) |
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
(10,244 |
) |
|
$ |
3,736 |
|
|
|
|
|
|
|
|
|
|
|
| NOTE 5: |
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 Yen-denominated Eurobonds 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 27, 2016, the
Company had forward foreign exchange contracts to buy
$674.9 million and to sell $364.9 million against various
foreign currencies. These contracts are at various exchange rates
and expire at various dates through February 2018.
The table below provides data about the carrying values of
derivative instruments and non-derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
November 27, 2016 |
|
|
November 29, 2015 |
|
| |
|
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)
|
|
$ |
30,160 |
|
|
$ |
(6,893 |
) |
|
$ |
23,267 |
|
|
$ |
31,808 |
|
|
$ |
(4,677 |
) |
|
$ |
27,131 |
|
|
Forward foreign exchange contracts(2)
|
|
|
1,481 |
|
|
|
(7,014 |
) |
|
|
(5,533 |
) |
|
|
253 |
|
|
|
(8,062 |
) |
|
|
(7,809 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
31,641 |
|
|
$ |
(13,907 |
) |
|
|
|
|
|
$ |
32,061 |
|
|
$ |
(12,739 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivatives
designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yen-denominated
Eurobonds
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
— |
|
|
$ |
(7,832 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Included in “Other current
assets” or “Other non-current assets” on the
Company’s consolidated balance sheets. |
| (2) |
Included in “Other accrued
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 offset
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 27, 2016 |
|
|
November 29, 2015 |
|
| |
|
Gross
Amounts of
Recognized
Assets /
(Liabilities) |
|
|
Gross
Amounts
Offset in the
Statement
of Financial
Position |
|
|
Net Amounts
of Assets /
(Liabilities)
Presented in
the Statement
of Financial
Position |
|
|
Gross
Amounts of
Recognized
Assets /
(Liabilities) |
|
|
Gross
Amounts
Offset in the
Statement of
Financial
Position |
|
|
Net Amounts
of Assets /
(Liabilities)
Presented in
the Statement
of Financial
Position |
|
| |
|
(Dollars in
thousands) |
|
|
Over-the-counter forward
foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
$ |
29,240 |
|
|
$ |
(8,374 |
) |
|
$ |
20,866 |
|
|
$ |
30,837 |
|
|
$ |
(4,930 |
) |
|
$ |
25,907 |
|
|
Financial liabilities
|
|
|
(10,365 |
) |
|
|
8,374 |
|
|
|
(1,991 |
) |
|
|
(7,599 |
) |
|
|
4,930 |
|
|
|
(2,669 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$ |
18,875 |
|
|
|
|
|
|
|
|
|
|
$ |
23,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded derivative contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
$ |
2,401 |
|
|
$ |
— |
|
|
$ |
2,401 |
|
|
$ |
1,224 |
|
|
$ |
— |
|
|
$ |
1,224 |
|
|
Financial liabilities
|
|
|
(3,542 |
) |
|
|
— |
|
|
|
(3,542 |
) |
|
|
(5,140 |
) |
|
|
— |
|
|
|
(5,140 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$ |
(1,141 |
) |
|
|
|
|
|
|
|
|
|
$ |
(3,916 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
November 27,
2016 |
|
|
As of
November 29,
2015 |
|
|
Year Ended |
|
| |
|
|
|
November 27,
2016 |
|
|
November 29,
2015 |
|
|
November 30,
2014 |
|
| |
|
(Dollars in
thousands) |
|
|
Forward foreign exchange contracts
|
|
$ |
4,637 |
|
|
$ |
4,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yen-denominated
Eurobonds
|
|
|
(19,811 |
) |
|
|
(18,982 |
) |
|
$ |
2,627 |
|
|
$ |
965 |
|
|
$ |
3,767 |
|
|
Euro senior notes
|
|
|
(15,751 |
) |
|
|
(15,751 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Cumulative income taxes
|
|
|
12,168 |
|
|
|
11,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
(18,757 |
) |
|
$ |
(18,247 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 27,
2016 |
|
|
November 29,
2015 |
|
|
November 30,
2014 |
|
| |
|
(Dollars in
thousands) |
|
|
Forward foreign exchange contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
$ |
17,175 |
|
|
$ |
14,720 |
|
|
$ |
(6,184 |
) |
|
Unrealized
|
|
|
(1,315 |
) |
|
|
19,386 |
|
|
|
(4,920 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
15,860 |
|
|
$ |
34,106 |
|
|
$ |
(11,104 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|