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Derivatives And Fair Value Measurements | 9 Months Ended
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Jul. 01, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives And Fair Value Measurements | Derivatives and Fair Value Measurements All derivatives are recognized in the accompanying Condensed Consolidated Balance Sheets at their estimated fair value. The Company uses derivatives to manage the variability of foreign currency obligations. The Company has cash flow hedges related to variable rate debt and forecasted foreign currency obligations, in addition to non-designated hedges to manage foreign currency exposures associated with certain foreign currency denominated assets and liabilities. The Company does not enter into derivatives for speculative purposes. ASC Topic 815-10, “Derivatives and Hedging,” requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position. In accordance with ASC Topic 815-10, the Company designates some foreign currency exchange contracts as cash flow hedges of forecasted foreign currency expenses. Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in “Accumulated other comprehensive loss” in the accompanying Condensed Consolidated Balance Sheets until earnings are affected by the variability of the cash flows. In the next 12 months, the Company estimates that $0.3 million of unrealized gains, net of tax, related to cash flow hedges will be reclassified from other comprehensive income (loss) into earnings. Changes in the fair value of the non-designated derivatives related to recognized foreign currency denominated assets and liabilities are recorded in "Miscellaneous income (expense)" in the accompanying Condensed Consolidated Statements of Comprehensive Income. The Company enters into forward currency exchange contracts for its Malaysian operations on a rolling basis. The Company had cash flow hedges outstanding with a notional value of $67.0 million as of July 1, 2017 and $73.7 million as of October 1, 2016. These forward currency contracts fix the exchange rates for the settlement of future foreign currency obligations that have yet to be realized. The total fair value of the cash flow hedges was a $0.3 million asset as of July 1, 2017 and a $0.5 million liability as of October 1, 2016. The Company had additional forward currency exchange contracts outstanding with a notional value of $124.5 million as of July 1, 2017 and $109.6 million as of October 1, 2016. The Company did not designate these derivative instruments as hedging instruments. In accordance with ASC Topic 815-10, the net settlement amount (fair value) related to these contracts is recorded on the Condensed Consolidated Balance Sheets as either a current or long-term asset or liability, depending on the term, and as an element of "Miscellaneous income (expense)." The total fair value of these derivatives was a net $0.1 million asset as of both July 1, 2017 and October 1, 2016. In 2013, the Company entered into a $75.0 million notional amount interest rate swap contract, which expired on May 5, 2017, related to $75.0 million of borrowings outstanding under the Credit Facility. The interest rate swap paid the Company variable interest at the one month LIBOR rate, and the Company paid the counterparty a fixed interest rate. The fixed interest rate for the contract was 0.875%. The interest rate swap contract qualified as a cash flow hedge and all changes in the fair value of the interest rate swap were recorded in "Accumulated other comprehensive loss" on the accompanying Condensed Consolidated Balance Sheets until earnings were affected by the variability of cash flows. The total fair value of the interest rate swap contract as of October 1, 2016 was approximately a $0.1 million liability. The notional amount of the Company’s interest rate swap was $75.0 million as of October 1, 2016. The tables below present information regarding the fair values of derivative instruments (as defined in Note 1, "Basis of Presentation and Significant Accounting Policies") and the effects of derivative instruments on the Company’s Condensed Consolidated Financial Statements:
Fair Values of Derivative Instruments
(in thousands of dollars)
|  | Asset Derivatives |  | Liability Derivatives
|  |  |  | July 1, 2017 |  | October 1, 2016 |  |  |  | July 1, 2017 |  | October 1, 2016
Derivatives Designated as Hedging Instruments |  | Balance Sheet Classification |  | Fair Value |  | Fair Value |  | Balance Sheet Classification |  | Fair Value |  | Fair Value
Interest rate swaps |  | Prepaid expenses and other |  | $ | — |  |  | $ | — |  |  | Other accrued liabilities |  | $ | — |  |  | $ | 132 |
Foreign currency forward contracts |  | Prepaid expenses and other |  | $ | 296 |  |  | $ | — |  |  | Other accrued liabilities |  | $ | — |  |  | $ | 486 |
Fair Values of Derivative Instruments
(in thousands of dollars)
|  | Asset Derivatives |  | Liability Derivatives
|  |  |  | July 1, 2017 |  | October 1, 2016 |  |  |  | July 1, 2017 |  | October 1, 2016
Derivatives Not Designated as Hedging Instruments |  | Balance Sheet Classification |  | Fair Value |  | Fair Value |  | Balance Sheet Classification |  | Fair Value |  | Fair Value
Foreign currency forward contracts |  | Prepaid expenses and other |  | $ | 1,732 |  |  | $ | 182 |  |  | Other accrued liabilities |  | $ | 1,583 |  |  | $ | 130 |
Derivative Impact on Accumulated Other Comprehensive Loss
for the Three Months Ended
(in thousands of dollars)
|  | Amount of Gain (Loss) Recognized in Other Comprehensive Loss (“OCL”) on Derivatives (Effective Portion)
Derivatives in Cash Flow Hedging Relationships |  | July 1, 2017 |  | July 2, 2016
Interest rate swaps |  | $ | (11 | ) |  | $ | (100 | )
Foreign currency forward contracts |  | $ | 1,921 |  |  | $ | (1,160 | )
Derivative Impact on Gain (Loss) Recognized in Income
for the Three Months Ended
(in thousands of dollars)
|  |  |  | Amount of Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships |  | Classification of Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion) |  | July 1, 2017 |  | July 2, 2016
Interest rate swaps |  | Interest expense |  | $ | (7 | ) |  | $ | (83 | )
Foreign currency forward contracts |  | Selling and administrative expenses |  | $ | (102 | ) |  | $ | 2 |
Foreign currency forward contracts |  | Cost of sales |  | $ | (968 | ) |  | $ | 73 |
Treasury rate locks |  | Interest expense |  | $ | 80 |  |  | $ | 77 |
Interest rate swaps |  | Income tax expense |  | $ | (84 | ) |  | $ | — |
|  |  |  | Amount of Gain (Loss) on Derivatives Recognized in Income
Derivatives Not Designated as Hedging Instruments |  | Location of Gain (Loss) Recognized on Derivatives in Income |  | July 1, 2017 |  | July 2, 2016
Foreign currency forward contracts |  | Miscellaneous income (expense) |  | $ | (286 | ) |  | $ | 94 |
Derivative Impact on Accumulated Other Comprehensive Loss
for the Nine Months Ended
(in thousands of dollars)
|  | Amount of Gain (Loss) Recognized in OCL on Derivatives (Effective Portion)
Derivatives in Cash Flow Hedging Relationships |  | July 1, 2017 |  | July 2, 2016
Interest rate swaps |  | $ | (10 | ) |  | $ | (70 | )
Foreign currency forward contracts |  | $ | (2,122 | ) |  | $ | 7,209 |
Derivative Impact on Gain (Loss) Recognized in Income
for the Nine Months Ended
(in thousands of dollars)
|  |  |  | Amount of Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationships |  | Classification of Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion) |  | July 1, 2017 |  | July 2, 2016
Interest rate swaps |  | Interest expense |  | $ | (142 | ) |  | $ | (304 | )
Foreign currency forward contracts |  | Selling and administrative expenses |  | $ | (274 | ) |  | $ | (510 | )
Foreign currency forward contracts |  | Cost of sales |  | $ | (2,630 | ) |  | $ | (4,744 | )
Treasury rate locks |  | Interest expense |  | $ | 251 |  |  | $ | 239 |
Interest rate swaps |  | Income tax expense |  | $ | (84 | ) |  | $ | — |
|  |  |  | Amount of Gain (Loss) on Derivatives Recognized in Income
Derivatives Not Designated as Hedging Instruments |  | Location of Gain (Loss) Recognized on Derivatives in Income |  | July 1, 2017 |  | July 2, 2016
Foreign currency forward contracts |  | Miscellaneous income (expense) |  | $ | 1,575 |  |  | $ | (74 | )
There were no gains or losses recognized in income for derivatives related to ineffective portions or amounts excluded from effectiveness testing for the three or nine months ended July 1, 2017 and July 2, 2016. The following table lists the fair values of assets (liabilities) of the Company’s derivatives as of July 1, 2017 and October 1, 2016, by input level, as defined in Note 1, "Basis of Presentation and Significant Accounting Policies":
Fair Value Measurements Using Input Levels Liability
(in thousands of dollars)
July 1, 2017 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Foreign currency forward contracts |  | $ | — |  |  | $ | 445 |  |  | $ | — |  |  | $ | 445 |
October 1, 2016 |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | — |  |  | $ | (132 | ) |  | $ | — |  |  | $ | (132 | )
Foreign currency forward contracts |  | $ | — |  |  | $ | (434 | ) |  | $ | — |  |  | $ | (434 | )
The fair value of interest rate swaps and foreign currency forward contracts is determined using a market approach, which includes obtaining directly or indirectly observable values from third parties active in the relevant markets. The primary input in the fair value of the interest rate swaps is the relevant LIBOR forward curve. Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for currency and interest rate forward curves.

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