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Derivative Financial Instruments | 9 Months Ended
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Jun. 29, 2013
Derivative Instruments and Hedges, Assets [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments We principally use derivative financial instruments to manage foreign exchange risk related to foreign operations and foreign currency transactions and interest rate risk associated with long-term debt. We enter into derivative financial instruments with a number of major financial institutions to minimize counterparty credit risk. Derivatives designated as hedging instruments Interest rate swaps are used to adjust the proportion of total debt that is subject to variable and fixed interest rates. The interest rate swaps are designated as hedges of the amount of future cash flows related to interest payments on variable-rate debt that, in combination with the interest payments on the debt, convert a portion of the variable-rate debt to fixed-rate debt. At June 29, 2013, we had interest rate swaps with notional amounts totaling $120,000. The interest rate swaps effectively convert this amount of variable-rate debt to fixed-rate debt at 1.8%, including the applicable margin of 138 basis points as of June 29, 2013. The interest will revert back to variable rates based on LIBOR plus the applicable margin upon the maturity of the interest rate swaps on January 15, 2015 and January 15, 2016. We use foreign currency forward contracts as cash flow hedges to effectively fix the exchange rates on future payments and revenue. To mitigate exposure in movements between various currencies, primarily the Philippine peso, we had outstanding foreign currency forwards with notional amounts of $49,433 at June 29, 2013. These contracts mature at various times through the third quarter of 2015. These interest rate swaps and foreign currency forwards are recorded in the consolidated condensed balance sheets at fair value and the related gains or losses are deferred in shareholders’ equity as a component of Accumulated Other Comprehensive Income (Loss) (AOCI). These deferred gains and losses are reclassified into expense during the periods in which the related payments or receipts affect earnings. However, to the extent the interest rate swaps and foreign currency forwards are not perfectly effective in offsetting the change in the value of the payments and revenue being hedged, the ineffective portion of these contracts is recognized in earnings immediately. Ineffectiveness was not material in the first nine months of 2013 or 2012. Activity in AOCI related to these derivatives is summarized below:
|  | Three Months Ended |  | Nine Months Ended
|  | June 29, 2013 |  | June 30, 2012 |  | June 29, 2013 |  | June 30, 2012
Balance at beginning of period |  | $ | 72 |  |  | $ | (78 | ) |  | $ | 220 |  |  | $ | (165 | )
Net deferral in AOCI of derivatives: |  |  |  |  |  |  |  |
Net increase (decrease) in fair value of derivatives |  | (1,863 | ) |  | 372 |  |  | (1,696 | ) |  | 568 |
Tax effect |  | 722 |  |  | (173 | ) |  | 652 |  |  | (245 | )
|  | (1,141 | ) |  | 199 |  |  | (1,044 | ) |  | 323 |
Net reclassification from AOCI into earnings: |  |  |  |  |  |  |  |
Reclassification from AOCI into earnings |  | (42 | ) |  | 6 |  |  | (462 | ) |  | (67 | )
Tax effect |  | 16 |  |  | 3 |  |  | 191 |  |  | 39 |
|  | (26 | ) |  | 9 |  |  | (271 | ) |  | (28 | )
Balance at end of period |  | $ | (1,095 | ) |  | $ | 130 |  |  | $ | (1,095 | ) |  | $ | 130 |
Activity and classification of derivatives are as follows:
|  |  | Net deferral in AOCI of derivatives - effective portion
|  |  | Three Months Ended |  | Nine Months Ended
| Statement of earnings classification |  | June 29, 2013 |  | June 30, 2012 |  | June 29, 2013 |  | June 30, 2012
Interest rate swaps | Interest expense |  | $ | 156 |  |  | $ | — |  |  | $ | (47 | ) |  | $ | — |
Foreign currency forwards | Cost of sales |  | (2,019 | ) |  | 372 |  |  | (1,649 | ) |  | 568 |
Net gain (loss) |  |  | $ | (1,863 | ) |  | $ | 372 |  |  | $ | (1,696 | ) |  | $ | 568 |
|  |  | Net reclassification from AOCI into earnings - effective portion
|  |  | Three Months Ended |  | Nine Months Ended
| Statement of earnings classification |  | June 29, 2013 |  | June 30, 2012 |  | June 29, 2013 |  | June 30, 2012
Interest rate swaps | Interest expense |  | $ | (61 | ) |  | $ | — |  |  | $ | (104 | ) |  | $ | (67 | )
Foreign currency forwards | Cost of sales |  | 103 |  |  | (6 | ) |  | 566 |  |  | 134 |
Net gain (loss) |  |  | $ | 42 |  |  | $ | (6 | ) |  | $ | 462 |  |  | $ | 67 |
Derivatives not designated as hedging instruments We also have foreign currency exposure on balances, primarily intercompany, that are denominated in foreign currencies and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in the consolidated condensed statements of earnings. To minimize foreign currency exposure, we had foreign currency forwards with notional amounts of $231,197 at June 29, 2013. The foreign currency forwards are recorded in the consolidated condensed balance sheets at fair value and resulting gains or losses are recorded in the consolidated condensed statements of earnings. We recorded the following gains or losses on foreign currency forwards which are included in other income or expense and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other income or expense:
|  | Three Months Ended |  | Nine Months Ended
|  | June 29, 2013 |  | June 30, 2012 |  | June 29, 2013 |  | June 30, 2012
Net gain (loss) |  | $ | (2,835 | ) |  | $ | (812 | ) |  | $ | 3,066 |  |  | $ | (1,383 | )
Summary of derivatives The fair value and classification of derivatives is summarized as follows:
|  |  | June 29, 2013 |  | September 29, 2012
Derivatives designated as hedging instruments: |  |  |  |
Foreign currency forwards | Other current assets |  | $ | 90 |  |  | $ | 467 |
Foreign currency forwards | Other assets |  | 50 |  |  | 32 |
Interest rate swaps | Other current assets |  | 33 |  |  | — |
Interest rate swaps | Other assets |  | 48 |  |  | — |
| Total assets |  | $ | 221 |  |  | $ | 499 |
Foreign currency forwards | Other accrued liabilities |  | $ | 1,130 |  |  | $ | 41 |
Foreign currency forwards | Other long-term liabilities |  | 858 |  |  | 40 |
Interest rate swaps | Other accrued liabilities |  | 21 |  |  | — |
Interest rate swaps | Other long-term liabilities |  | 12 |  |  | — |
| Total liabilities |  | $ | 2,021 |  |  | $ | 81 |
Derivatives not designated as hedging instruments: |  |  |  |
Foreign currency forwards | Other current assets |  | $ | 2,026 |  |  | $ | 1,456 |
| Total assets |  | $ | 2,026 |  |  | $ | 1,456 |
Foreign currency forwards | Other accrued liabilities |  | $ | 1,552 |  |  | $ | 2,549 |
| Total liabilities |  | $ | 1,552 |  |  | $ | 2,549 |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708775-113959 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624163-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708773-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41635-113959 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624258-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5618551-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80748-113994 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624181-113959 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80784-113994 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41620-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624177-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579245-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5580258-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579240-113959 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41641-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959 Reference 20: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624171-113959 + Details
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