Derivative Instruments

9 Months Ended

Dec. 27, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Foreign Currency Derivative Instruments

Derivative Instruments

The Company is exposed to market risks associated with movements in foreign currency exchange rates and changes in interest rates. Changes in foreign currency exchange rates can impact the Company's foreign currency denominated monetary assets and liabilities, whereas changes in benchmark interest rates can impact the fair value of the Company's term notes. The Company uses derivative instruments to mitigate the impact of these market risks, and not for trading or any speculative purpose.

Foreign Currency Derivatives

As a global organization, the Company enters into contracts denominated in foreign currencies. By generally matching revenues, costs and borrowings to the same currency, the Company is able to substantially mitigate foreign currency risk to earnings. In other instances, the Company manages the exposure to fluctuations in foreign currencies by using short-term option contracts to economically hedge certain revenues denominated in non-functional currencies, and short-term foreign currency forward contracts to economically hedge certain foreign currency denominated assets and liabilities, including intercompany accounts and loans. For accounting purposes, these foreign currency option and forward contracts are not designated as hedges, as defined under ASC 815, “Derivatives and Hedging,” and all changes in their fair value are reported in current period earnings within the other income (expense) line of the consolidated condensed statement of operations.

The notional amount of the foreign currency forward contracts outstanding as of December 27, 2013 and March 29, 2013 was $1,526 million and $993 million, respectively. The notional amount of option contracts outstanding as of December 27, 2013 and March 29, 2013 was $210 million and $744 million, respectively.

The estimated fair values of the foreign currency derivative assets and liabilities were $1 million and $16 million, respectively, as of December 27, 2013, and $5 million and $11 million, respectively, as of March 29, 2013 (see Note 6).

The Company is subject to counterparty credit risk in connection with its foreign currency derivative instruments. To mitigate this risk, the Company enters into forward and option contracts from several financial institutions and regularly reviews its credit exposure and the creditworthiness of the counterparties. As of December 27, 2013, there were five counterparties with concentration of credit risk. The maximum amount of loss, based on gross fair value of the foreign currency derivative instruments that the Company could incur, is $1 million.

It is the Company's policy to not offset derivative assets and liabilities despite the existence of enforceable master netting arrangements with some of its counterparties. The following table provides information about the potential effect of such netting arrangements on the Company's derivative instruments:

	Fair Value as of
	December 27, 2013				March 29, 2013
(Amounts in millions)	Assets		Liabilities		Assets		Liabilities
Gross amount of derivative instruments recognized in consolidated condensed balance sheets	$	1	$	16	$	5	$	11
Gross amounts not offset in the consolidated condensed balance sheets (1)	—		—		2		2
Net amount	$	1	$	16	$	3	$	9

⁽¹⁾ These amounts represent the fair value of derivative instruments subject to enforceable master netting arrangements that the Company has elected to not offset. The Company's derivative contracts do not require it to hold or post financial collateral.

Interest Rate Swaps

Pursuant to its interest rate and risk management strategy, during the second quarter of fiscal 2014, the Company entered into multiple interest rate swap transactions to hedge the fair value of $275 million of the Company's 4.45% term notes, due 2022, which effectively converted the debt into floating interest rate debt.

For accounting purposes, these interest rate swap transactions were designated as fair value hedges and qualified for short-cut method of hedge accounting, as defined under ASC 815, “Derivatives and Hedging.” Accordingly, changes in the fair values of the interest rate swaps were reported in earnings and fully offset changes in the fair value of the underlying debt (see Note 8). The cash flows associated with the interest rate swaps are reported in net cash provided by (used in) operating activities on the Consolidated Condensed Statements of Cash Flows.

The estimated fair value of the interest rate swaps was under $1 million as of December 27, 2013 and this amount is reported as a derivative liability included within the other liabilities line on the Company's Consolidated Condensed Balance Sheets (see Note 6). The change in fair value of interest rate swaps was $6 million for the quarter ended December 27, 2013.

Consistent with the Company's counterparty risk management strategy, the Company contracted with several financial institutions to execute the swap transactions.