Derivative Instruments

9 Months Ended

Sep. 29, 2013

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments

NOTE 11: 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 currently mitigates certain foreign currency exchange rate risks with derivative instruments. The Company does not currently manage its interest rate risk with derivative instruments.

The Company faces exposure to foreign currency exchange rate fluctuations, as a significant portion of its revenues, expenses, assets, and liabilities are denominated in currencies other than the functional currencies of the Company’s subsidiaries or the reporting currency of the Company, which is the U.S. Dollar. The Company faces two types of foreign currency exchange rate exposures:

• Transactional currency/functional currency exchange rate exposures from transactions that are denominated in currencies other than the functional currency of the subsidiary. These transactions gains and losses are reported on the Consolidated Statements of Operations as a component of “Foreign Currency Gain (Loss).”

• Functional currency/reporting currency exchange rate exposures from the revaluation of the assets and liabilities of our foreign subsidiaries, whose functional currency is generally their local currency, to the Company’s reporting currency, which is the U.S. Dollar. The net effect of these translation gains and losses are reported in “Accumulated Other Comprehensive Loss” on the Consolidated Balance Sheets, and also on the Consolidated Statements of Comprehensive Income.

The Company’s foreign currency risk management strategy is principally designed to mitigate the potential financial impact of changes in the value of transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates. Derivative instruments, specifically foreign currency forward contracts with maturities of up to three months, are used to manage the exposure to fluctuations in foreign currency exchange rates that arise primarily from foreign-denominated receivables and payables. As of September 29, 2013, the Company’s forward contracts do not qualify for effective hedge accounting. Because forward contracts are used as an economic hedge, any gain or loss on the underlying foreign-denominated balance is intended to be offset by the loss or gain on the forward contract. Gains and losses on forward contracts and foreign-denominated receivables and payables are included in “Foreign Currency Gain (Loss)” on the Consolidated Statements of Operations. The Company recorded net foreign currency losses of $442,000 and $303,000 in the three-month and nine-month periods ended September 29, 2013, respectively, and net foreign currency losses of $409,000 and $1,077,000 in the three-month and nine-month periods ended September 30, 2012, respectively.

As of September 29, 2013, the Company had the following outstanding forward contracts that were entered into to mitigate foreign currency exchange rate risk (in thousands):

Currency	Notional Value		USD Equivalent
Chinese Renminbi		20,000	$	3,213
Japanese Yen		235,400		2,395
Singapore Dollar		3,025		2,379
Euro		1,035		1,400
British Pound		650		1,036
Korean Won		1,121,500		1,029
Taiwanese Dollar		28,450		952
Swedish Krona		5,800		891
Hungarian Forint		135,000		603

Information regarding the fair value of the forward contracts outstanding as of September 29, 2013 and December 31, 2012 was as follows (in thousands):

	Asset Derivatives					Liability Derivatives
	Balance	Fair Value				Balance	Fair Value
	Sheet Location	September 29, 2013		December 31, 2012		Sheet Location	September 29, 2013		December 31, 2012
Currency forward contracts	Prepaid expenses and other current assets	$	81	$	44	Accrued expenses	$	64	$	14

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 September 29, 2013 and September 30, 2012 was as follows (in thousands):

		Amount of Loss Recognized							Amount of Gain (Loss) Recognized
	Location of	Three-months ended						Location of	Nine-months ended
	Loss Recognized	September 29, 2013			September 30, 2012			Gain (Loss) Recognized	September 29, 2013		September 30, 2012
Currency forward contracts	Foreign currency loss	$	(186	)	$	(546	)	Foreign currency gain (loss)	$	10	$	(637	)