DERIVATIVE FINANCIAL INSTRUMENT (Notes)

12 Months Ended

Sep. 30, 2023

Derivative financial Instruments [Abstract]

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 is denominated in foreign 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 twelve 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 Operations as the impact of the hedged transaction.

The fair value of derivative instruments on our Consolidated Balance Sheets as of September 30, 2023 and October 1, 2022 is as follows:


	As of
(in thousands)	September 30, 2023		October 1, 2022
	Notional Amount		Fair Value Liability Derivatives(1)		Notional Amount		Fair Value Liability Derivatives(1)
Derivatives designated as hedging instruments:
Foreign exchange forward contracts (2)	$	54,590	$	(723)	$	57,570	$	(2,234)
Total derivatives	$	54,590	$	(723)	$	57,570	$	(2,234)

(1)The fair value of derivative liabilities is measured using level 2 fair value inputs and is included in accrued expenses and other current liabilities on our Consolidated Balance Sheets.

(2)Hedged amounts expected to be recognized into earnings within the next twelve months.

The effect of derivative instruments designated as cash flow hedges in our Consolidated Statements of Operations for the fiscal years ended September 30, 2023 and October 1, 2022 was as follows:


(in thousands)	Fiscal
	2023		2022
Foreign exchange forward contract in cash flow hedging relationships:
Net gain/(loss) recognized in OCI, net of tax(1)	$	2,381	$	(2,694)
Net gain/(loss) reclassified from accumulated OCI into earnings, net of tax(2)	$	870	$	(1,076)

(1)Net change in the fair value of the effective portion classified in OCI.

(2)Effective portion classified as selling, general and administrative expense.