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DERIVATIVES AND FAIR VALUE MEASUREMENTS | 6 Months Ended
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Oct. 01, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES AND FAIR VALUE MEASUREMENTS | DERIVATIVES AND FAIR VALUE MEASUREMENTS We manufacture, market and sell our products globally. For the six months ended October 1, 2016, 40.6% of our sales were generated outside the U.S. in local currencies. We also incur certain manufacturing, marketing and selling costs in international markets in local currency. Accordingly, our earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates relative to the U.S. Dollar, our reporting currency. We have a program in place that is designed to mitigate our exposure to changes in foreign currency exchange rates. That program includes the use of derivative financial instruments to minimize, for a period of time, the impact on our financial results from changes in foreign exchange rates. We utilize foreign currency forward contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily the Japanese Yen and the Euro, and to a lesser extent the Swiss Franc, Australian Dollar, Canadian Dollar and the Mexican Peso. This does not eliminate the impact of the volatility of foreign exchange rates, but because we generally enter into forward contracts one year out, rates are fixed for a one-year period, thereby facilitating financial planning and resource allocation. Designated Foreign Currency Hedge Contracts All of our designated foreign currency hedge contracts as of October 1, 2016 and April 2, 2016 were cash flow hedges under ASC Topic 815, Derivatives and Hedging. We record the effective portion of any change in the fair value of designated foreign currency hedge contracts in Other Comprehensive Income (Loss) until the related third-party transaction occurs. Once the related third-party transaction occurs, we reclassify the effective portion of any related gain or loss on the designated foreign currency hedge contracts to earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, we would reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had designated foreign currency hedge contracts outstanding in the contract amount of $105.0 million as of October 1, 2016 and $107.4 million as of April 2, 2016. At October 1, 2016, losses of $5.7 million, net of tax, will be reclassified to earnings within the next twelve months. Substantially all currency cash flow hedges outstanding as of October 1, 2016 mature within twelve months. Non-Designated Foreign Currency Contracts We manage our exposure to changes in foreign currency on a consolidated basis to take advantage of offsetting transactions and balances. We use foreign currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These foreign currency forward contracts are entered into for periods consistent with currency transaction exposures, generally one month. They are not designated as cash flow or fair value hedges under ASC Topic 815. These forward contracts are marked-to-market with changes in fair value recorded to earnings. We had non-designated foreign currency hedge contracts under ASC Topic 815 outstanding in the contract amount of $50.0 million as of October 1, 2016 and $48.8 million as of April 2, 2016. Interest Rate Swaps On December 21, 2012, we entered into two interest rate swap agreements (the "Swaps") on a total notional amount of $250.0 million of debt. The Swaps are amortizing and mature on August 1, 2017. We designated the Swaps as cash flow hedges of variable interest rate risk associated with $250.0 million of indebtedness. As of October 1, 2016, the notional amount of these Swaps was $150.0 million. For three and six months ended October 1, 2016 and September 26, 2015, we recorded nominal activity in Accumulated Other Comprehensive Loss to recognize the effective portion of the fair value of interest rate swaps that qualify as cash flow hedges. Fair Value of Derivative Instruments The following table presents the effect of our derivative instruments designated as cash flow hedges and those not designated as hedging instruments under ASC Topic 815 in our consolidated statements of income and comprehensive income (loss) for the six months ended October 1, 2016:
(In thousands) |  | Amount of (Loss) Gain Recognized in Accumulated Other Comprehensive Loss |  | Amount of (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings |  | Location in Consolidated Statements of Income and Comprehensive Income (Loss) |  | Amount of Gain (Loss) Excluded from Effectiveness Testing * |  | Location in Consolidated Statements of Income and Comprehensive Income (Loss)
Designated foreign currency hedge contracts, net of tax |  | $ | (3,176 | ) |  | $ | (2,394 | ) |  | Net revenues, COGS, and SG&A |  | $ | 223 |  |  | Interest and other expense, net
Non-designated foreign currency hedge contracts |  | — |  |  | — |  |  |  |  | (835 | ) |  | Interest and other expense, net
Designated interest rate swaps, net of tax |  | $ | 69 |  |  | $ | — |  |  | Interest and other expense, net |  | $ | — |  |  |
* We exclude the difference between the spot rate and hedge forward rate from our effectiveness testing. We did not have fair value hedges or net investment hedges outstanding as of October 1, 2016 or April 2, 2016. As of October 1, 2016, no deferred tax assets were recognized for designated foreign currency hedges. ASC Topic 815 requires all derivative instruments to be recognized at their fair value as either assets or liabilities on the balance sheet. We determine the fair value of our derivative instruments using the framework prescribed by ASC Topic 820, Fair Value Measurements and Disclosures, by considering the estimated amount we would receive or pay to sell or transfer these instruments at the reporting date and by taking into account current interest rates, currency exchange rates, current interest rate curves, interest rate volatilities, the creditworthiness of the counterparty for assets and our creditworthiness for liabilities. In certain instances, we may utilize financial models to measure fair value. Generally, we use inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of October 1, 2016, we have classified our derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of our derivative instruments. The following tables present the fair value of our derivative instruments as they appear in our consolidated balance sheets as of October 1, 2016 and April 2, 2016:
(In thousands) |  | Location in Balance Sheet |  | As of October 1, 2016 |  | As of April 2, 2016
Derivative Assets: |  |  |  |  |  |
Designated foreign currency hedge contracts |  | Other current assets |  | $ | 389 |  |  | $ | 427 |
|  |  |  | $ | 389 |  |  | $ | 427 |
Derivative Liabilities: |  |  |  |  |  |
Designated foreign currency hedge contracts |  | Other current liabilities |  | $ | 3,914 |  |  | $ | 4,056 |
Designated interest rate swaps |  | Other current liabilities |  | 27 |  |  | 154 |
|  |  |  | $ | 3,941 |  |  | $ | 4,210 |
Other Fair Value Measurements Fair value is defined as the exit price that would be received from the sale of an asset or paid to transfer a liability, using assumptions that market participants would use in pricing an asset or liability. The fair value guidance establishes the following three-level hierarchy used for measuring fair value:
• | Level 1 — Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.
• | Level 2 — Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.
• | Level 3 — Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.
Our money market funds carried at fair value are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. Fair Value Measured on a Recurring Basis Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of October 1, 2016 and April 2, 2016.
|  | As of October 1, 2016
(In thousands) |  | Level 1 |  | Level 2 |  | Total
Assets |  |  |  |  |  |
Money market funds |  | $ | 94,097 |  |  | $ | — |  |  | $ | 94,097 |
Designated foreign currency hedge contracts |  | — |  |  | 389 |  |  | 389 |
|  | $ | 94,097 |  |  | $ | 389 |  |  | $ | 94,486 |
Liabilities |  |  |  |  |  |
Designated foreign currency hedge contracts |  | $ | — |  |  | $ | 3,914 |  |  | $ | 3,914 |
Designated interest rate swaps |  | — |  |  | 27 |  |  | 27 |
|  | $ | — |  |  | $ | 3,941 |  |  | $ | 3,941 |
|  | As of April 2, 2016
|  | Level 1 |  | Level 2 |  | Total
Assets |  |  |  |  |  |
Money market funds |  | $ | 72,491 |  |  | $ | — |  |  | $ | 72,491 |
Designated foreign currency hedge contracts |  | — |  |  | 427 |  |  | 427 |
Designated interest rate swaps |  | $ | 72,491 |  |  | $ | 427 |  |  | $ | 72,918 |
Liabilities |  |  |  |  |  |  |  |  |
Designated foreign currency hedge contracts |  | $ | — |  |  | $ | 4,056 |  |  | $ | 4,056 |
Designated interest rate swaps |  | — |  |  | 154 |  |  | 154 |
|  | $ | — |  |  | $ | 4,210 |  |  | $ | 4,210 |
For the six months ended October 1, 2016, non-designated foreign currency hedge contracts were not significant and are not disclosed separately in the above table. Other Fair Value Disclosures The Term Loan (which is carried at amortized cost), accounts receivable and accounts payable approximate fair value.

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