XML 63 R13.htm IDEA: XBRL DOCUMENT v3.2.0.727
DERIVATIVES FINANCIAL INSTRUMENTS (Notes)
 9 Months Ended
Jun. 27, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS
The Company’s international operations are exposed to changes in foreign exchange rates due to transactions denominated in currencies other than U.S. dollars. Most of the Company’s revenue and cost of materials are transacted in U.S. dollars. However, a significant amount of the Company’s operating expenses are denominated in local currencies, primarily in Singapore.
The foreign currency exposure of our operating expenses is generally hedged with foreign exchange forward contracts. The Company’s foreign exchange risk management programs include using foreign exchange forward contracts with cash flow hedge accounting designation to hedge exposures to the variability in the U.S.-dollar equivalent of forecasted non-U.S.-dollar-denominated operating expenses. These instruments generally mature within 6 months. For these derivatives, we report the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive income (loss), and we reclassify it into earnings in the same period or periods in which the hedged transaction affects earnings and in the same line item on the consolidated statements of income as the impact of the hedged transaction.

There were no outstanding derivative instruments as of September 27, 2014. The fair value of derivative instruments on our Consolidated Balance Sheet as of June 27, 2015 was as follows:
 
As of
(in thousands)
June 27, 2015
 
Notional Amount
 
Fair Value Asset Derivatives(1)
 
Fair Value Liability Derivatives(2)
Derivatives designated as hedging instruments:
 
 
 
 
 
Foreign exchange forward contracts (3)
$
11,097

 
$
12

 
$
—

Total derivatives
$
11,097

 
$
12

 
$
—


(1)
The fair value of derivative assets is measured using level 2 fair value inputs and is included in prepaid expenses and other current assets on our Consolidated Balance Sheet.
(2)
Included in accrued expenses and other current liabilities on our Consolidated Balance Sheet.
(3)
Hedged amounts expected to be recognized to income within the next twelve months.

The effects of derivative instruments designated as cash flow hedges in our Consolidated Statements of Income for the three and nine months ended June 27, 2015 and June 28, 2014 are as follows:
(in thousands)
 
Three months ended
 
Nine months ended
 
 
June 27, 2015
 
June 28, 2014
 
June 27, 2015
 
June 28, 2014
Foreign exchange forward contract in cash flow hedging relationships:
 
 
 
 
 
 
 
 
Net (loss)/gain recognized in OCI, net of tax(1)
 
$
(5
)
 
$
95

 
$
(778
)
 
$
95

Net (loss)/gain reclassified from accumulated OCI into income, net of tax(2)
 
$
(17
)
 
$
23

 
$
(790
)
 
$
23

Net gain recognized in income(3)
 
$
—

 
$
—

 
$
—

 
$
—

(1)Net change in the fair value of the effective portion classified in other comprehensive income (“OCI”).
(2)Effective portion classified as selling, general and administrative expense.
(3)Ineffective portion and amount excluded from effectiveness testing classified in selling, general and administrative expense.