Derivative Instruments and Hedging Activities

9 Months Ended

Jun. 29, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

All derivatives, whether designated in hedging relationships or not, are recorded on the Condensed Consolidated Balance Sheet at fair value. We enter into foreign exchange forwards to minimize the risks of foreign currency fluctuation of specific assets and liabilities on the balance sheet; these are not designated as hedging instruments. Our derivative contracts do not contain any credit risk related contingent features and do not require collateral or other security to be furnished by us or the counterparties.

We maintain operations in various countries outside of the United States and have foreign subsidiaries that manufacture and sell our products in various global markets. The majority of our sales are transacted in U.S. dollars. However, we do generate net sales in other currencies, primarily the Japanese Yen, the Euro and the Korean Won. As a result, our earnings, cash flows and cash balances are exposed to fluctuations in foreign currency exchange rates. We attempt to limit these exposures through financial market instruments. We utilize derivative instruments, primarily forward contracts with maturities of three months or less, to manage our exposure associated with anticipated cash flows and net asset and liability positions denominated in foreign currencies. Gains and losses on the forward contracts are mitigated by gains and losses on the underlying instruments. We do not use derivative financial instruments for speculative or trading purposes. If a financial counterparty to any of our hedging arrangements experiences financial difficulties or is otherwise unable to honor the terms of the foreign currency hedge, we may experience material financial losses.

For derivative instruments that are not designated as hedging instruments, gains and losses are recognized in other income (expense).

The outstanding notional contract and fair value amounts of hedge contracts, with maximum maturity of three months, are as follows (in thousands):

	U.S. Notional Contract Value						U.S. Notional Fair Value
	June 29, 2013			September 29, 2012			June 29, 2013			September 29, 2012
Euro currency hedge contracts
Purchase	$	43,696		$	61,779		$	43,115		$	62,404
Korean Won currency hedge contracts
Sell	$	(12,929	)	$	(39,039	)	$	(12,872	)	$	(39,559	)
Other foreign currency hedge contracts
Purchase	$	1,471		$	—		$	1,463		$	—
Sell	$	(23,483	)	$	(20,452	)	$	(23,590	)	$	(20,578	)

The fair value of our derivative instruments are included in prepaid expenses and other assets and in other current liabilities in our Condensed Consolidated Balance Sheets; such amounts were not material as of June 29, 2013 and September 29, 2012.

The amount of non-designated derivative instruments’ gain in the Condensed Consolidated Statements of Operations included in other income (expense) for the three and nine months endedJune 29, 2013 and June 30, 2012 is as follows (in thousands):

	Amount of Gain or (Loss) Recognized in Income on Derivatives
	Three Months Ended		Nine Months Ended
	June 29, 2013		June 29, 2013
Derivatives not designated as hedging instruments
Foreign exchange contracts	$	338	$	1,476

	Amount of Gain or (Loss) Recognized in Income on Derivatives
	Three Months Ended			Nine Months Ended
	June 30, 2012			June 30, 2012
Derivatives not designated as hedging instruments
Foreign exchange contracts	$	(3,246	)	$	(3,657	)