Financial Instruments

Foreign Currencies

As a multinational business, the Company’s transactions are denominated in a variety of currencies. When appropriate, the Company uses forward foreign currency contracts to reduce its overall exposure to the effects of currency fluctuations on its results of operations and cash flows. The Company’s policy prohibits trading in currencies for which there are no underlying exposures, or entering into trades for any currency to intentionally increase the underlying exposure.

The Company primarily hedges existing assets and liabilities and cash flows associated with transactions currently on its balance sheet.

As of June 29, 2012 and December 31, 2011, the Company had outstanding foreign exchange contracts in a net sell position with a net notional amount of $197.8 million and $203.4 million, respectively. Such contracts were obtained through financial institutions and were scheduled to mature within three months. Management believes that these financial instruments should not subject the Company to increased risks from foreign exchange movements because gains and losses on these contracts should offset losses and gains on the underlying assets, liabilities and transactions to which they are related. The following schedule shows the Company’s net foreign exchange positions in U.S. dollars as of June 29, 2012 and December 31, 2011 (in millions):



	June 29, 2012					December 31, 2011
	Buy (Sell)			Notional Amount		Buy (Sell)			Notional Amount
Chinese Renminbi	$	(4.7	)	$	4.7	$	(12.8	)	$	12.8
Euro	(33.6		)	33.6		(30.8		)	30.8
Japanese Yen	(104.4		)	104.4		(100.0		)	100.0
Malaysian Ringgit	30.6			30.6		29.4			29.4
Other Currencies	13.5			24.5		7.6			30.4
	$	(98.6	)	$	197.8	$	(106.6	)	$	203.4

The Company is exposed to credit-related losses if counterparties to its foreign exchange contracts fail to perform their obligations. As of June 29, 2012, the counterparty to the Company’s foreign exchange contracts is a highly rated financial institution and no credit-related losses are anticipated. Amounts payable or receivable under the contracts are included in other current assets or accrued expenses in the accompanying consolidated balance sheet. For the three and six months ended June 29, 2012 and July 1, 2011, realized and unrealized foreign currency transaction gain was $0.1 million and a loss of $1.0 million, respectively, and a gain of $4.8 million and a loss of $3.5 million, respectively.

Cash Flow Hedges

The Company is exposed to global market risks associated with fluctuations in interest rates and foreign currency exchange rates. The Company addresses these risks through controlled management that includes the use of derivative financial instruments to economically hedge or reduce these exposures. The Company does not enter into derivative financial instruments for trading or speculative purposes.

The purpose of the Company's foreign currency hedging activities is to protect the Company from the risk that the eventual cash flows resulting from transactions in foreign currencies will be adversely affected by changes in exchange rates. The Company enters into forward contracts that are designated as foreign-currency cash flow hedges of selected forecasted payments denominated in currencies other than U.S. dollars. All the contracts mature within 12 months and upon maturity the amount recorded in accumulated other comprehensive income is reclassified into earnings. The Company documents all relationships between designated hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions.

All derivatives are recognized on the balance sheet at their fair value and classified based on the instrument's maturity date. The total notional amount of outstanding derivatives designated as cash flow hedges as of June 29, 2012 was approximately $45.9 million, which is primarily comprised of cash flow hedges for Malaysian Ringgit/U.S. Dollar and Philippine Peso/U.S. Dollar currency pairs.

For the quarter and six months ended June 29, 2012, the Company recorded a gain of $0.3 million and $0.7 million, respectively, recognized in other comprehensive income on derivatives associated with cash flow hedges. As of June 29, 2012, the Company had liability balances for contracts designated as cash flow hedging instruments of $0.9 million, which were classified as other liabilities. For the quarter and six months ended July 1, 2011, there was no cash flow hedging activity. As of June 29, 2012, the Company had asset balances for contracts designated as cash flow hedging instruments of $0.2 million, which were classified as other assets.

As of June 29, 2012 and July 1, 2011, the Company had balances for contracts not designated as hedging instruments of $1.5 million and $1.3 million, respectively, which were classified as other assets. Additionally, as of July 1, 2011, the Company had liability balances for contracts not designated as hedging instruments of $0.8 million, which were classified as other liabilities.