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Table of Contents
The Company seeks to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency
exchange rates by entering into financial arrangements, from time to time, which are intended to
provide a hedge against all or a
portion of the risks associated with such volatility. The Company continues to have exposure to such risks to the extent they are not
hedged.
The following table sets forth the scheduled maturities of the Company’s debt outstanding at July 2, 2011 (dollars in millions):
The following table sets forth the carrying value and fair value of the Company’s debt at July 2, 2011 (dollars in millions):
Many of the Company’
s subsidiaries, on occasion, purchase and sell products in currencies other than their functional currencies.
This subjects the Company to the risks associated with fluctuations in foreign currency exchange rates. The Company reduces this risk
by utilizing natural hedging (offsetting receivables and payables) as well as by creating offsetting positions through the use of
derivative financial instruments, primarily forward foreign exchange contracts with maturities of less than sixty days. The Company
continues to have exposure to foreign currency risks to the extent they are not hedged. The Company adjusts all foreign denominated
balances and any outstanding foreign exchange contracts to fair market value through the consolidated statements of operations.
Therefore, the market risk related to foreign exchange contracts is offset by changes in valuation of the underlying items being
hedged. The asset or liability representing the fair value of foreign exchange contracts is classified in the captions “
other current
assets” or “accrued expenses and other,”
as applicable, in the accompanying consolidated balance sheets. A hypothetical 10% change
in currency exchange rates under the contracts outstanding at July 2, 2011 would result in an increase or decrease of approximately
$25.7 million to the fair value of the forward foreign exchange contracts, which would generally be offset by an opposite effect on the
related hedged positions.
The financial statements and supplementary data are listed under Item 15 of this Report.
None.
33
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Fiscal Year
2012
2013
2014
2015
2016
Thereafter
Total
Liabilities:
Fixed rate debt (1)
$
1.2
$
1.2
$
301.6
$
0.3
$
250.0
$
600.0
$
1,154.3
Floating rate debt
$
241.9
$
123.4
$
—
$
—
$
—
$
—
$
365.3
(1)
Excludes discounts on long
-
term notes.
Carrying Value at
Fair Value at
Carrying Value at
Fair Value at
July 2, 2011
July 2, 2011
July 3, 2010
July 3, 2010
Liabilities:
Fixed rate debt (1)
$
1,154.3
$
1,261.1
$
1,154.3
$
1,220.7
Average interest rate
6.1
%
6.1
%
Floating rate debt
$
365.3
$
365.3
$
129.5
$
129.5
Average interest rate
2.2
%
1.5
%
(1)
Excludes discounts on long
-
term notes.
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure