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Financial Instruments
12 Months Ended
Jun. 30, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments [Text Block]
FINANCIAL INSTRUMENTS

Short-term investments
Fair values were as follows:
 
June 30, 2012
 
June 25, 2011
 
Amortized Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Estimated
Fair Value
 
Amortized Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Estimated
Fair Value
 
(in thousands)
Available-for-sale investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency securities
$
75,007

 
$
319

 
$

 
$
75,326

 
$
49,826

 
$
520

 
$

 
$
50,346

Total available-for-sale investments
$
75,007

 
$
319

 
$

 
$
75,326

 
$
49,826

 
$
520

 
$

 
$
50,346



In the fiscal years ended June 30, 2012 and June 25, 2011, Maxim did not recognize any impairment charges on short-term investments.
The government agency securities have maturity dates between February 26, 2013 and December 18, 2013.
Derivative instruments and hedging activities

Foreign Currency Risk

The Company generates revenues in various global markets based on orders obtained in non-U.S. currencies, primarily the Japanese Yen, the Euro and the British Pound. Maxim incurs expenditures denominated in non-U.S. currencies, principally the Philippine Pesos and Thai Baht associated with the Company's manufacturing activities in the Philippines and Thailand, respectively, and expenditures for sales offices and research and development activities undertaken outside of the U.S. Maxim is exposed to fluctuations in foreign currency exchange rates primarily on orders and accounts receivable from sales in these foreign currencies and cash flows for expenditures in these foreign currencies. Maxim has established risk management strategies designed to reduce the impact of volatility of future cash flows caused by changes in the exchange rate for these currencies. These strategies reduce, but do not entirely eliminate, the impact of currency exchange rates movements. Maxim does not use derivative financial instruments for speculative or trading purposes. The Company routinely hedges its exposures to certain foreign currencies with various financial institutions in an effort to minimize the impact of certain currency exchange rate fluctuations. If a financial counterparty to any of the Company's hedging arrangements experiences financial difficulties or is otherwise unable to honor the terms of the foreign currency hedge, the Company may experience financial losses.
 
For derivative instruments that are designated and qualify as cash flow hedges under ASC No. 815-Derivatives and Hedging ("ASC 815"), the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings into the same financial statement line as the item being hedged, and in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in interest and other expense, net.
 
For derivative instruments that are not designated as hedging instruments under ASC 815, gains and losses are recognized in interest and other expense, net. All derivatives are foreign currency forward contracts to hedge certain foreign currency denominated assets or liabilities. The gains and losses on these derivatives largely offset the changes in the fair value of the assets or liabilities being hedged.

Fair Value of Derivative Instruments in the Consolidated Balance Sheets
Maxim estimates the fair value of derivatives primarily based on pricing models using current market rates and records all derivatives on the balance sheet at fair value. The gross notional and the recorded fair value of derivative financial instruments in the Consolidated Balance Sheets were as follows:

 
As of June 30, 2012
 
As of June 25, 2011
 
Gross Notional(1)
 
Other Current Assets
 
Accrued Expenses
 
Gross Notional (1)
 
Other Current Assets
 
Accrued Expenses
 
(in thousands)
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
$
37,955

 
$
150

 
$
459

 
$
35,629

 
$
53

 
$
287

 
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
35,105

 
492

 
48

 
26,342

 
273

 
22

Total derivatives
$
73,060

 
$
642

 
$
507

 
$
61,971

 
$
326

 
$
309

(1) Represents the face amounts of contracts that were outstanding as of June 30, 2012 and June 25, 2011, as applicable.
Derivatives designated as hedging instruments

The following table provides the balances and changes in the accumulated other comprehensive income (loss) related to derivative instruments during the fiscal year ended June 30, 2012 and the fiscal year ended June 25, 2011.

 
 
June 30,
2012
 
June 25,
2011
 
 
(in thousands)
Beginning balance
 
$
(234
)
 
$
(235
)
Loss reclassified to income
 
653

 
514

Loss recorded in other comprehensive loss
 
(110
)
 
(513
)
Ending balance
 
$
309

 
$
(234
)


Maxim expects to reclassify an estimated net accumulated other comprehensive gain of $0.2 million, net of taxes, to earnings in the next twelve months along with the earnings effects of the related forecasted transactions in association with cash flow hedges.







The before-tax effect of cash flow derivative instruments for the fiscal years ended June 30, 2012 and June 25, 2011 was as follows:
 
 
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective portion)
 
 
 
 
Years Ended
 
 
Location
 
June 30,
2012
 
June 25,
2011
 
 
 
 
(in thousands)
Cash Flow hedges:
 
 
 
 
 
 
Foreign exchange contracts
 
Net Revenues
 
$
(312
)
 
$
(1,152
)
Foreign exchange contracts
 
Cost of goods sold
 
187

 
638

Foreign exchange contracts
 
Operating Expense
 
(528
)
 

Total cash flow hedges
 
 
 
$
(653
)
 
$
(514
)

The before-tax effect of derivative instruments not designated as hedging instruments on the Consolidated Statements of Income for the fiscal years ended June 30, 2012 and June 25, 2011 was as follows:
 
Gain (Loss) Recognized in Income on Derivative Instrument
 
 
 
Years Ended
 
Location
 
June 30,
2012
 
June 25,
2011
 
June 26,
2010
 
 
 
(in thousands)
Foreign exchange contracts
Interest income (expense) and other, net
 
$
1,653

 
$
(1,893
)
 
$
1,444

Total
 
 
$
1,653

 
$
(1,893
)
 
$
1,444



Volume of Derivative Activity

Total net U.S. Dollar notional amounts for foreign currency forward contracts, presented by net currency purchase (sell), are as follows:

In United States Dollars
 
June 30, 2012
 
June 25, 2011
 
 
(in thousands)
Euro
 
$
(10,686
)
 
$
1,542

Japanese Yen
 
(2,254
)
 
(5,156
)
British Pound
 
(575
)
 
(10,928
)
Philippine Peso
 
15,443

 
17,140

Thai Baht
 
4,264

 
3,523

Total                                                
 
$
6,192

 
$
6,121










Long-term debt
The following table summarizes the Company's long-term debt:
 
June 30, 2012
 
June 25, 2011
 
(in thousands)
3.45% fixed rate notes due June 2013
$
300,000

 
$
300,000

SensorDynamics Debt (Denominated in Euro)
 
 
 
Term fixed rate notes (2.0%-2.5%) due March 2013 to September 2015
6,285

 

Amortizing fixed rate notes (1.5%-2.75%) due up to June 2014
1,127

 

Amortizing floating rate notes (EURIBOR plus 1.5%) due up to June 2014
1,676

 

Total
309,088

 
300,000

Less: Current portion of long-term debt
(303,496
)
 

Total long-term debt
$
5,592

 
$
300,000



On June 17, 2010, the Company completed a public offering of $300 million aggregate principal amount of the Company's 3.45% senior unsecured notes due on June 14, 2013 ("$300 million notes"), with an effective interest rate of 3.49%. Interest is payable semi-annually in arrears on June 14 and December 14 of each year. The $300 million notes are governed by base and supplemental indentures dated June 10, 2010 and June 17, 2010, respectively, between the Company and Wells Fargo Bank, National Association, as trustee.

In conjunction with the SensorDynamics acquisition as discussed in Note 9: "Acquisitions" of these Notes to Consolidated Financial Statements, Maxim acquired certain fixed and floating rate notes as detailed in the table above.

The Company accounts for all the notes above based on their amortized cost. The discount and expenses are being amortized to Interest and other expense, net over the life of the Notes. Interest expense associated with the Notes was $11.2 million and $10.4 million during the years ended June 30, 2012 and June 25, 2011, respectively. The interest expense is recorded in Interest income (expense) and other, net in the Consolidated Statements of Income.

The estimated fair value of Maxim's debt was approximately $317 million at June 30, 2012. The estimated fair value of the debt is based primarily on an income approach utilizing market observable input such as interest rate.

As of June 30, 2012, the Company had the capacity to issue an unspecified amount of additional debt securities, common stock, preferred stock, warrants, rights and units under its 2010 Shelf Registration Statement.

Credit Facility

On October 13, 2011, the Company entered into a $250 million senior unsecured revolving credit facility with certain institutional lenders that expires on October 13, 2016. The Company agreed to pay the lenders a facility fee at a rate per annum that varies based on the Company's index debt rating. Any advances under the credit agreement will accrue interest at a base rate plus a margin based on the Company's debt index rating. The credit agreement requires the Company to comply with certain covenants, including a requirement that the Company maintain a ratio of debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) of not more than 3 to 1 and a minimum interest coverage ratio (EBITDA divided by interest expense) greater than 3.5 to 1. As of June 30, 2012, the Company had not borrowed any amounts from this credit facility and was in compliance with all debt covenants.

Other Financial Instruments
For the balance of Maxim's financial instruments, cash equivalents, accounts receivable, accounts payable and other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.