Derivative Instruments

9 Months Ended

Oct. 02, 2011

Derivative Instruments [Abstract]

Derivative Instruments

NOTE 10: Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations including foreign currency exchange rate risk and interest rate risk. The Company does not currently manage its interest rate risk with derivative instruments; however, foreign currency exchange rate risk is currently mitigated with derivative instruments. The Company uses derivative instruments to provide an economic hedge against its transactional currency/functional currency exchange rate exposures. Forward contracts on currencies are entered into to manage the transactional currency/functional currency exposure of the Company’s Irish subsidiary’s accounts receivable denominated in U.S. dollars and intercompany receivables denominated in Japanese Yen. These forward contracts are used to minimize foreign currency gains or losses, as the gains or losses on these contracts are intended to offset the losses or gains on the underlying exposures.

These forward contracts do not qualify for hedge accounting. Both the underlying exposure and the forward contracts are recorded at fair value on the Consolidated Balance Sheets and changes in fair value are reported as “Foreign currency gain (loss)” on the Consolidated Statements of Operations. The Company recorded a net foreign currency loss of $231,000 in the three-month period ended October 2, 2011 and a net foreign currency gain of $102,000 in the three-month period ended October 3, 2010. The Company recorded net foreign currency losses of $80,000 and $71,000 in the nine-month periods ended October 2, 2011 and October 3, 2010, respectively.

As of October 2, 2011, the Company had the following outstanding forward contracts that were entered into to mitigate foreign currency exchange rate risk:

Currency	Amount
Japanese Yen/Euro	350,000,000 Japanese Yen
U.S. Dollar/Euro	11,310,000 U.S. Dollars

Information regarding the fair value of the forward contracts outstanding as of October 2, 2011 and December 31, 2010 was as follows (in thousands):

	Asset Derivatives					Liability Derivatives
	Balance	Fair Value				Balance	Fair Value
	Sheet	October 2,		December 31,		Sheet	October 2,		December 31,
	Location	2011		2010		Location	2011		2010
Currency forward contracts	Prepaid expenses and other current assets	$	13	$	83	Accrued expenses	$	370	$	125

Information regarding the effect of the forward contracts, net of the underlying exposure, on the Consolidated Statements of Operations for the three-month and nine-month periods ended October 2, 2011 and October 3, 2010 were as follows (in thousands):

	Location of	Amount of Loss				Location of	Amount of Gain (Loss)
	Loss	Recognized in Income on				Gain (Loss)	Recognized in Income on
	Recognized	Derivatives				Recognized	Derivatives
	in Income	Three-months ended				in Income	Nine-months ended
	on	October 2,	October 3,			on	October 2,	October 3,
	Derivatives	2011	2010			Derivatives	2011	2010
Currency forward contracts	Foreign currency loss	$ (171)	$	(88	)	Foreign currency loss	$ (43)	$	185