Derivative Financial Instruments

9 Months Ended

Dec. 28, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company’s primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk and interest rate risk. As a result of the use of derivative financial instruments, the Company is exposed to the risk that counterparties to derivative contracts may fail to meet their contractual obligations. The Company manages counterparty credit risk in derivative contracts by reviewing counterparty creditworthiness on a regular basis, establishing collateral requirement and limiting exposure to any single counterparty. The right of set-off that exists with certain transactions enables the Company to net amounts due to and from the counterparty, reducing the maximum loss from credit risk in the event of counterparty default.

As of December 28, 2013 and March 30, 2013, the Company had the following outstanding forward currency exchange contracts (in notional amount), which are derivative financial instruments:

(In thousands and U.S. dollars)	December 28, 2013		March 30, 2013
Singapore Dollar	$	61,031	$	70,197
Euro	44,433		39,865
Indian Rupee	17,457		16,941
British Pound	10,811		11,602
Japanese Yen	9,057		10,891
	$	142,789	$	149,496

As part of the Company’s strategy to reduce volatility of operating expenses due to foreign exchange rate fluctuations, the Company employs a hedging program with a forward outlook of up to two years for major foreign-currency-denominated operating expenses. The outstanding forward currency exchange contracts expire at various dates between January 2014 and November 2015. The net unrealized gain or loss, which approximates the fair market value of the above contracts, is expected to be realized and reclassified into net income within the next two years.

As of December 28, 2013, all of the forward foreign currency exchange contracts were designated and qualified as cash flow hedges and the effective portion of the gain or loss on the forward contracts was reported as a component of other comprehensive income and reclassified into net income in the same period during which the hedged transaction affects earnings. The estimated amount of such gains or losses as of December 28, 2013 that is expected to be reclassified into earnings within the next twelve months was not material. The ineffective portion of the gains or losses on the forward contracts was included in the net income for all periods presented.

The Company may enter into forward foreign currency exchange contracts to hedge firm commitments such as acquisitions and capital expenditures. Gains and losses on foreign currency forward contracts that are designated as hedges of anticipated transactions, for which a firm commitment has been attained and the hedged relationship has been effective, are deferred and included in income or expenses in the same period that the underlying transaction is settled. Gains and losses on any instruments not meeting the above criteria are recognized in income or expenses in the condensed consolidated statements of income as they are incurred.

The 3.125% Debentures include provisions which qualify as an embedded derivative. See "Note 4. Fair Value Measurements" for more discussion about the embedded derivative. The fair value of the embedded derivative was $628 thousand and $1.1 million as of December 28, 2013 and March 30, 2013, respectively. The changes in the fair value of the embedded derivative were recorded to interest and other expense, net, on the Company’s condensed consolidated statements of income.

The Company had the following derivative instruments (forward foreign currency exchange contracts) as of December 28, 2013 and March 30, 2013, located on the condensed consolidated balance sheet, utilized for risk management purposes detailed above:

	Foreign Exchange Contracts
	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
December 28, 2013	Prepaid expenses and other current assets	$	2,396	Other accrued liabilities	$	1,924
March 30, 2013	Prepaid expenses and other current assets	$	1,179	Other accrued liabilities	$	2,794

The following table summarizes the effect of derivative instruments on the condensed consolidated statements of income for third quarter and the first nine months of fiscal 2014 and 2013:

	Three Months Ended						Nine Months Ended
(In thousands)	December 28, 2013			December 29, 2012			December 28, 2013		December 29, 2012
Amount of gain (loss) recognized in other comprehensive income on derivative (effective portion of cash flow hedging)	$	(355	)	$	(683	)	$	1,585	$	4,822
Amount of gain (loss) reclassified from accumulated other comprehensive income into income (effective portion) *	$	(259	)	$	(19	)	$	1,836	$	(3,011	)
Amount of gain (loss) recorded (ineffective portion) *	$	5		$	(3	)	$	11	$	4

* Recorded in Interest and Other Expense location within the condensed consolidated statements of income