2.2.0.25falsefalse0211 - Disclosure - Derivative Instruments and Hedging Activitiestruefalsefalse1falsefalseUSDfalsefalse1/2/2011 - 4/2/2011
USD ($)
USD ($) / shares
$Jan-02-2011_Apr-02-2011http://www.sec.gov/CIK0001114200duration2011-01-02T00:00:002011-04-02T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0us-gaap_DerivativeInstrumentsAndHedgesAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 11 - us-gaap:DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>11. Derivative Instruments and Hedging Activities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We are exposed to certain risks relating to our ongoing business operations. We use derivatives to
mitigate a portion of our exposure to volatility in foreign currency exchange rates. Foreign
exchange forward contracts are used to manage the currency risk associated with forecasted sales to
and receivables from certain subsidiaries, denominated in their local currencies. We hedge only
exposures in the ordinary course of business.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We account for our derivative instruments at fair value provided we meet certain documentary and
analytical requirements to qualify for hedge accounting treatment. Hedge accounting creates the
potential for a Consolidated Statement of Operations match between the changes in fair values of
derivatives and the changes in cost of the associated underlying transactions, in this case
translation gain or loss. Derivatives held by us are designated as hedges of specific exposures at
inception, with an expectation that changes in the fair value will essentially offset the change in
the underlying exposure. Discontinuance of hedge accounting is required whenever it is
subsequently determined that an underlying transaction is not going to occur, with any gains or
losses recognized in the Consolidated Statement of Operations at such time, with any subsequent
changes in fair value recognized currently in earnings. Fair values of derivatives are determined
based on quoted prices for similar contracts.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have foreign currency exchange forward contract derivatives outstanding at April 2, 2011 which
are designated as cash flow hedges of currency fluctuations for a portion of our forecasted sales
to certain subsidiaries, denominated in Euros, British pounds, Canadian dollars, Australian
dollars, and Swedish krona. These contracts have remaining terms between one and twelve months. The
notional amount of the foreign exchange forward contracts designated as cash flow hedges was $45.4
million and $46.4 million at April 2, 2011 and January 1, 2011, respectively. We have also entered
into foreign exchange forward contracts to manage a portion of our exposure to foreign exchange
rate fluctuations on certain inter-company receivables denominated in Euros, British pounds,
Canadian dollars, and Australian dollars. These contracts are not designated as an accounting
hedge, and the notional amount of these contracts at April 2, 2011 and January 1, 2011 was $8.3
million and $11.9 million, respectively. The associated underlying transactions are expected to
occur within the next month.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The effective portion of the change in fair value of foreign currency exchange contracts is
reported in accumulated other comprehensive income, a component of stockholders’ equity, and is
being recognized as an adjustment to other (expense) income, over the same period the related
expenses are recognized in earnings. Ineffectiveness would occur when changes in the market value
of the hedged transactions are not completely offset by changes in the market value of the
derivatives. Gains and losses on derivatives representing hedge ineffectiveness or hedge components
excluded from the assessment of effectiveness are recognized currently in earnings when incurred.
No ineffectiveness was recognized during the three months ended April 2, 2011 or April 3, 2010.
Amounts due from counterparties
(unrealized hedge gains) or owed to counterparties (unrealized hedge losses) are included in
accounts receivable, net or other accrued expenses, respectively. Cash receipts or payments
related to our derivatives are generally classified in the Consolidated Statements of Cash Flows as
cash flows from operating activities, consistent with the related items being hedged, unless the
derivative is not designated as a hedge or if hedge accounting is discontinued, in which case the
receipts or payments are classified as cash flows from investing activities.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">Information on the location and amounts of derivative fair values in the Consolidated Balance Sheets is
presented in the table below.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Derivative Liabilities</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Balance Sheet</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">(in thousands)</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Location</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>April 2, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>January 1, 2011</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Derivatives designated as hedging instruments</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign exchange forward contracts
</div></td>
<td> </td>
<td colspan="3" nowrap="nowrap" align="center">Other accrued expenses</td>
<td> </td>
<td align="left">$</td>
<td align="right">3,340</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,727</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Derivatives not designated as hedging instruments</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Foreign exchange forward contracts
</div></td>
<td> </td>
<td colspan="3" align="center">Other accrued expenses</td>
<td> </td>
<td> </td>
<td align="right">37</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">99</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Total derivatives</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,377</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,826</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">At April 2, 2011, approximately $3.4 million of the existing loss on the foreign exchange
forward contracts designated as a cash flow hedge, which is included in accumulated other
comprehensive income, is expected to be reclassified into earnings within the next twelve months.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We are exposed to credit losses in the event of non-performance by counterparties on these
financial instruments, and although no assurances can be given, we do not expect any of the
counterparties to fail to meet its obligations. The credit exposure related to these financial
instruments is represented by the fair value of contracts with a positive fair value at the
reporting date. To manage credit risks, we enter into derivative instruments with high quality
financial institutions, which we monitor regularly and take action where possible to mitigate risk.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Information on the location and amounts of derivative gains and losses recorded in other
comprehensive income (OCI) and recorded in the Consolidated Statements of Operations is presented
in the table below.
</div>
<div align="center" style="font-size: 10pt; margin-top: 18pt"><b>The Effect of Derivative Instruments on the Consolidated Statement of Operations<br />
for the Three Months Ended April 2, 2011 and April 3, 2010</b><br />
(in thousands)
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Location of Gain</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Amount of Gain (Loss)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>(Loss) Reclassified</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Amount of Gain (Loss) Reclassified</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Recognized in OCI on Derivatives</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>from Accumulated</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>from Accumulated OCI into Income</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><b>Derivatives in Cash Flow</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>(Effective Portion)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>OCI into Income</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>(Effective Portion)</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Hedging Relationships</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>April 2, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>April 3, 2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Effective Portion)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>April 2, 2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>April 3, 2010</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest rate swap
contracts
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">197</td>
<td> </td>
<td> </td>
<td colspan="3" align="left">Interest expense</td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(219</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Foreign exchange
contracts
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,784</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">1,782</td>
<td> </td>
<td> </td>
<td colspan="3" nowrap="nowrap" align="left">Other (expense) income</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(660</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(142</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(1,784</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">1,979</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(660</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(361</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="27%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="3%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Location of Gain (Loss)</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Amount of Gain (Loss) Recognized</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><b>Derivatives not designated</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Recognized in Income</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>in Income on Derivatives</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><b>as Hedging Instruments</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>on Derivatives</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>April 2, 2011</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 0px solid #000000"><b>April 3, 2010</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="5" align="left" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td> </td>
<td style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts
</div></td>
<td> </td>
<td colspan="3" align="center">Other (expense) income</td>
<td> </td>
<td nowrap="nowrap" align="right">$</td>
<td align="right">(363</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="right">$</td>
<td align="right">282</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThis element can be used to disclose the entity's entire derivative instruments and hedging activities disclosure as a single block of text. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising there from, and the amounts of and methodologies and assumptions used in determining the amounts of such items.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 45
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44
falsefalse12Derivative Instruments and Hedging ActivitiesUnKnownUnKnownUnKnownUnKnownfalsetrue