Financial Instruments

12 Months Ended

Apr. 02, 2011

Financial Instruments [Abstract]

Financial Instruments

16.   Financial Instruments

Derivative Financial Instruments

The Company is primarily exposed to changes in foreign currency exchange rates relating to certain anticipated cash flows from its international operations and potential declines in the value of reported net assets of certain of its foreign operations, as well as changes in the fair value of its fixed-rate debt relating to changes in interest rates. Consequently, the Company periodically uses derivative financial instruments to manage such risks. The Company does not enter into derivative transactions for speculative or trading purposes.

The following table summarizes the Company’s outstanding derivative instruments on a gross basis as recorded in the consolidated balance sheets as of April 2, 2011 and April 3, 2010:

	Notional Amounts				Derivative Assets						Derivative Liabilities
					Balance			Balance			Balance				Balance
	April 2,		April 3,		Sheet	Fair		Sheet	Fair		Sheet	Fair			Sheet	Fair
Derivative Instrument(a)	2011		2010		Line(b)	Value		Line(b)	Value		Line(b)	Value			Line(b)	Value
					April 2, 2011			April 3, 2010			April 2, 2011				April 3, 2010
	(millions)
Designated Hedges:
FC — Inventory purchases	$	342.4	$	294.0	PP	$	1.1	PP	$	14.5	AE	$	(9.4	)	AE	$	(2.4	)
FC — I/C royalty payments		46.8		84.4	—		—	(c)		2.1	AE		(3.6	)	ONCL		(0.1	)
FC — Interest payments		9.3		13.9	PP		0.4	—		—	—		—		AE		(1.2	)
FC — Other		29.6		2.8	PP		0.5	—		—	AE		(0.1	)	AE		(0.1	)
IRS — Euro Debt		295.5		—	—		—	—		—	ONCL		(3.3	)	—		—
NI — Euro Debt		291.9		282.1	—		—	—		—	LTD		(305.0	)(d)	LTD		(291.7	)(d)
Total Designated Hedges	$	1,015.5	$	677.2		$	2.0		$	16.6		$	(321.4	)		$	(295.5	)
Undesignated Hedges:
FC — Other		40.0		13.6	—		—	—		—	(e)		(1.4	)	AE		(0.4	)
Total Hedges	$	1,055.5	$	690.8		$	2.0		$	16.6		$	(322.8	)		$	(295.9	)

^(a) FC = Forward exchange contracts for the sale or purchase of foreign currencies; IRS = Interest Rate Swap; NI = Net Investment; Euro Debt = Euro-denominated 4.5% notes due October 2013.

^(b) PP = Prepaid expenses and other; OA = Other assets; AE = Accrued expenses and other; ONCL = Other non-current liabilities; LTD = Long-term debt.

(c)	$1.1 million included within PP and $1.0 million included within OA.
(d)	The Company’s Euro Debt is reported at carrying value in the Company’s consolidated balance sheets. The carrying value of the Euro Debt was $291.9 million as of April 2, 2011 and $282.1 million as of April 3, 2010.
(e)	$0.4 million included within AE and $1.0 million included within ONCL.

The following tables summarize the impact of the Company’s derivative instruments on its consolidated financial statements for the fiscal years presented:

	Gains (Losses)									Gains (Losses)
	Recognized in									Reclassified from
	OCI(b)									AOCI(b) to Earnings
	Fiscal Years Ended									Fiscal Years Ended									Location of Gains (Losses)
	April 2,			April 3,			March 28,			April 2,			April 3,			March 28,			Reclassified from AOCI(b)
Derivative Instrument(a)	2011			2010			2009			2011			2010			2009			to Earnings
	(millions)
Designated Cash Flow Hedges:
FC — Inventory purchases	$	(15.7	)	$	(8.4	)	$	38.5		$	15.2		$	12.6		$	(3.8	)	Cost of goods sold
FC — I/C royalty payments		(4.4	)		(1.3	)		3.8			(4.4	)		(2.0	)		(1.0	)	Foreign currency gains (losses)
FC — Interest payments		1.2			(0.8	)		(1.2	)		(0.7	)		1.2			(0.7	)	Foreign currency gains (losses)
FC — Other		0.4			0.2			(0.9	)		—			0.2			0.2		(c)
	$	(18.5	)	$	(10.3	)	$	40.2		$	10.1		$	12.0		$	(5.3	)
Designated Hedge of Net Investment:
Euro Debt	$	(13.1	)	$	(1.8	)	$	66.6		$	—		$	—		$	—		(d)
Total Designated Hedges	$	(31.6	)	$	(12.1	)	$	106.8		$	10.1		$	12.0		$	(5.3	)

	Gains (Losses)
	Recognized in Earnings
	Fiscal Years Ended
	April 2,			April 3,		March 28,			Location of Gains (Losses)
Derivative Instrument(a)	2011			2010		2009			Recognized in Earnings
	(millions)
Designated Fair Value Hedges:
IRS — Euro Debt	$	(3.3	)	$	—	$	—			Interest and other income, net
Undesignated Hedges:
FC — Other	$	(0.3	)	$	0.7	$	(0.3	)		Foreign currency gains (losses	)

(a)	FC = Forward exchange contracts for the sale or purchase of foreign currencies; Euro Debt = Euro-denominated 4.5% notes due October 2013; IRS = Interest Rate Swap.
(b)	AOCI, including the respective fiscal year’s OCI, is classified as a component of total equity.
(c)	Principally recorded within foreign currency gains (losses).
(d)	To the extent applicable, to be recognized as a gain (loss) on the sale or liquidation of the hedged net investment.

Over the next twelve months, it is expected that approximately $11 million of net losses deferred in AOCI related to derivative financial instruments outstanding as of April 2, 2011 will be recognized in earnings. No material gains or losses relating to ineffective or discontinued hedges were recognized during any of the fiscal years presented.

The following is a summary of the Company’s risk management strategies and the effect of those strategies on the consolidated financial statements.

Foreign Currency Risk Management

Forward Foreign Currency Exchange Contracts

The Company primarily enters into forward foreign currency exchange contracts as hedges to reduce its risk from exchange rate fluctuations on inventory purchases, intercompany royalty payments made by certain of its international operations, intercompany contributions to fund certain marketing efforts of its international operations, interest payments made in connection with outstanding debt and other foreign currency-denominated operational cash flows. As part of its overall strategy to manage the level of exposure to the risk of foreign currency exchange rate fluctuations, primarily to changes in the value of the Euro, the Japanese Yen, the Hong Kong Dollar, the Swiss Franc, and the British Pound Sterling, the Company hedges a portion of its foreign currency exposures anticipated over the ensuing twelve-month to two-year periods. In doing so, the Company uses foreign currency exchange forward contracts that generally have maturities of three months to two years to provide continuing coverage throughout the hedging period.

Hedge of a Net Investment in Certain European Subsidiaries

The Company designated the entire principal amount of its outstanding Euro Debt as a hedge of its net investment in certain of its European subsidiaries. To the extent this hedge remains effective, changes in the value of the Euro Debt resulting from fluctuations in the Euro exchange rate will continue to be reported in equity as a component of AOCI.

Interest Rate Risk Management

Interest Rate Swap Contracts

During the first quarter of Fiscal 2011, the Company entered into a fixed-to-floating interest rate swap designated as a fair value hedge to mitigate its exposure to changes in the fair value of the Company’s Euro Debt due to changes in the benchmark interest rate. The interest rate swap, which has a maturity date of October 4, 2013, has an aggregate notional value of €209.2 million and swaps the 4.5% fixed interest rate on the Company’s Euro Debt for a variable interest rate equal to the 3-month Euro Interbank Offered Rate plus 299 basis points. The Company’s interest rate swap meets the requirements for shortcut method accounting. Accordingly, changes in the fair value of the interest rate swap are exactly offset by changes in the fair value of the Euro Debt. No ineffectiveness has been recorded during Fiscal 2011.

On April 11, 2011, the Company terminated its interest rate swap, the impact of which is not expected to have a material impact on its consolidated financial statements.

See Note 3 for further discussion of the Company’s accounting policies relating to its derivative and other financial instruments.

Investments

The following table summarizes the Company’s short-term and non-current investments recorded in the consolidated balance sheets as of April 2, 2011 and April 3, 2010:

	April 2, 2011						April 3, 2010
	Short-term		Non-current				Short-term		Non-current
Type of Investment	< 1 year		1 - 3 years		Total		< 1 year		1 - 3 years		Total
	(millions)
Held-to-Maturity:
Treasury bills	$	—	$	—	$	—	$	126.6	$	—	$	126.6
Municipal bonds		90.8		12.7		103.5		102.2		67.8		170.0
Commercial paper		—		—		—		2.0		—		2.0
Other securities		—		—		—		—		5.0		5.0
Total held-to-maturity investments	$	90.8	$	12.7	$	103.5	$	230.8	$	72.8	$	303.6
Available-for-Sale:
Municipal bonds	$	32.3	$	68.1	$	100.4	$	—	$	—	$	—
Variable rate municipal securities		14.5		—		14.5		66.5		—		66.5
Auction rate securities		—		2.3		2.3		—		2.3		2.3
Other securities		—		0.5		0.5		—		0.4		0.4
Total available-for-sale investments	$	46.8	$	70.9	$	117.7	$	66.5	$	2.7	$	69.2
Other:
Time deposits and other	$	456.3	$	—	$	456.3	$	286.8	$	—	$	286.8
Total Investments	$	593.9	$	83.6	$	677.5	$	584.1	$	75.5	$	659.6

Held-to-maturity investments consist of debt securities that the Company has the intent and ability to retain until maturity. These securities are recorded at cost, adjusted for the amortization of premiums and discounts, which approximates fair value.

Available-for-sale investments primarily consist of municipal bonds, VRMS and auction rate securities. VRMS represent long-term municipal bonds with interest rates that reset at pre-determined short-term intervals, and can typically be put to the issuer and redeemed for cash upon demand, or shortly thereafter. Auction rate securities also have characteristics similar to short-term investments. However, the Company has classified these securities as non-current investments in its consolidated balance sheets as current market conditions call into question its ability to redeem these investments for cash within the next twelve months. No material unrealized or realized gains or losses on available-for-sale investments were recorded during any of the fiscal periods presented.

The Company did not recognize any other-than-temporary impairment charges in any of the fiscal years presented.

See Note 3 for further discussion of the Company’s accounting policies relating to investments.