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The Company must also make estimates related to the recognition of consideration received from suppliers for price protection, product rebates,
marketing/promotional activities, or any other programs. Consideration received or due from these supplier programs are recognized when
earned under the terms and conditions of the supplier programs as adjustments to product costs, or selling, general and administrative expenses
depending upon the nature and contractual requirements related to the consideration received. Some of these supplier programs may extend over
one or more reporting periods.
Recently Issued Accounting Pronouncements
See Note 1 in the Notes to Consolidated Financial Statements
contained in Item 15 of this Report for the discussion of recently issued
accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
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 an economic 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 June 28, 2014 (dollars in millions):
______________________
The following table sets forth the carrying value and fair value of the Company’s debt and the average interest rate at June 28, 2014 and
June 29, 2013 (dollars in millions):
______________________
Many of the Company’
s subsidiaries 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 (i.e., offsetting receivables and payables) as well as by creating offsetting positions through the use of derivative financial instruments,
primarily forward foreign exchange contracts typically with maturities of less than sixty days ("economic hedges"). The Company continues to
have exposure to foreign currency risks to the extent they are not hedged. The Company adjusts any economic hedges to fair value through the
consolidated statements of operations primarily within "other income (expense), net." Therefore, the changes in valuation of the underlying items
being economically hedged are offset by the changes in fair value of the forward foreign exchange contracts. The amounts representing the fair
value of foreign exchange contracts, based upon level 2 criteria under the fair value hierarchy, are classified in the captions “other current assets”
or “accrued expenses and other,”
as applicable, in the accompanying consolidated balance sheets and were not material as of June 28, 2014 and
June 29, 2013. The Company did not have material gains or losses related to the forward foreign exchange contracts during fiscal 2014 and
2013. A hypothetical 10% change in currency exchange rates under the contracts outstanding at June 28, 2014
33
Fiscal Year
2015
2016
2017
2018
2019
Thereafter
Total
Liabilities:
Fixed rate debt
(1)
$
159.7
$
252.6
$
301.3
$
—
$
—
$
650.0
$
1,363.6
Floating rate debt
$
705.4
$
12.0
$
—
$
—
$
—
$
—
$
717.4
(1) Excludes discounts on long-
term notes.
Carrying Value at
June 28, 2014
Fair Value at
June 28, 2014
Carrying Value
at June 29, 2013
Fair Value at
June 29, 2013
Liabilities:
Fixed rate debt
(1)
$
1,363.6
$
1,474.7
$
1,562.6
$
1,645.1
Average interest rate
5.4
%
5.8
%
Floating rate debt
$
717.4
$
717.4
$
485.2
$
485.2
Average interest rate
1.1
%
1.1
%
(1) Excludes discounts on long-term notes. Fair value was estimated primarily based upon quoted market prices for the Company's long-
term
notes.