Derivative Financial Instruments

6 Months Ended

Jun. 29, 2012

DERIVATIVE FINANCIAL INSTRUMENTS [Abstract]

Derivative Financial Instruments

DERIVATIVE FINANCIAL INSTRUMENTS

Derivatives Overview

The Company is exposed to certain risks relating to its ongoing business operations, including market risks relating to fluctuations in foreign currency exchange rates. Derivative financial instruments are recognized on the consolidated balance sheets as either assets or liabilities and are measured at fair value. Changes in the fair values of derivatives are recorded each period in earnings or accumulated other comprehensive income, depending on whether a derivative is effective as part of a hedged transaction. Gains and losses on derivative instruments reported in accumulated other comprehensive income are subsequently included in earnings in the periods in which earnings are affected by the hedged item. The Company does not use derivative instruments for speculative purposes.

The Company holds forward exchange contracts designed to hedge forecasted transactions denominated in foreign currencies and to minimize the impact of foreign currency fluctuations on the Company’s earnings and cash flows. Some of these contracts were designated as cash flow hedges. The Company will include in earnings amounts currently included in accumulated other comprehensive income upon recognition of cost of sales related to the underlying transaction. During the three and six months ended July 1, 2011, the loss reclassified to earnings from other comprehensive income for derivative instruments formerly designated as cash flow hedges was $0.2 million and $0.4 million, respectively. No amounts were reclassified to income from other comprehensive income for derivative instruments formerly designated as cash flow hedges during the three or six months ended June 29, 2012. Over the next twelve months the income related to cash flow hedges expected to be reclassified from other comprehensive income is $0.1 million.

Derivatives Not Designated as Hedging Instruments

The following table shows the fair value of derivative instruments not designated as hedging instruments:

		Fair Value
	Balance Sheet	June 29,		December 31,		Notional
In thousands	Location	2012		2011		Amount
Derivative Assets
Foreign exchange contracts	Other current assets /Other assets	$	1,222	$	3,517	$3,408 / $9,816 Australian Dollars
Foreign exchange contracts	Other current assets	67		1		$4,854 / $5,481
Total		$	1,289	$	3,518

5. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

Derivatives Not Designated as Hedging Instruments (continued)

On February 12, 2009, the Company dedesignated the forward contract it had entered into to hedge $36.5 million (AUD) of its $39.5 million (AUD) future minimum required payments to the Commonwealth of Australia. At June 29, 2012, the U.S. dollar value of the remaining $3.4 million (AUD) payable was $3.5 million.

The following table shows the location and amount of the gain or (loss) recognized on the Condensed Consolidated Statements of Operations for derivatives not designated as hedge instruments:

		For the Three Months Ended					For the Six Months Ended
	Income Statement Location	June 29, 2012			July 1, 2011		June 29, 2012		July 1, 2011
In thousands
Derivative Assets
Foreign exchange contracts (a)	Other expense, net	$	15		$	475	$	283	$	725
Foreign exchange contracts	Other expense, net	(78		)	—		72		—
Total		$	(63	)	$	475	$	355	$	725
Derivative Liabilities
Foreign exchange contracts	Other expense, net	$	—		$	—	$	—	$	(2	)
Total		$	—		$	—	$	—	$	(2	)

a) For the three months and six months ended June 29, 2012, the Company recorded income of $0.1 million and expense of $0.1 million, respectively, to other expense related to the change in the value of the previously hedged AUD payable. For the three months and sixth months ended July 1, 2011, the Company recorded income of $0.4 million and $0.3 million, respectively, to other income related to the change in value of the previously hedged AUD payable