Derivative Instruments

Foreign Currency Exchange Forward Contracts

The Company enters into foreign currency exchange forward contracts to manage its exposure to fluctuations in foreign exchange rates that arise primarily from its euro and British pound denominated receivables and euro denominated restricted cash balance amounts that are pledged as collateral for certain stand-by and commercial letters of credit. Gains and losses on these contracts are intended to offset the impact of foreign exchange rate fluctuations on the underlying foreign currency denominated accounts receivables and restricted cash, and therefore, do not subject the Company to material balance sheet risk. The forward contracts are with one high-quality institution and the Company consistently monitors the creditworthiness of the counterparty. The forward contracts entered into during the three and nine months ended September 27, 2014 were denominated in euros and British pounds, and had maturities of no more than 35 days. The contracts are settled for U.S. dollars at maturity at rates agreed to at inception of the contracts.

As of September 27, 2014, the Company did not designate foreign currency exchange forward contracts as hedges for accounting purposes, and accordingly changes in the fair value of these instruments are included in other gain (loss), net, in the accompanying condensed consolidated statements of operations. For the three months ended September 27, 2014 and September 28, 2013, the before-tax effect of foreign currency exchange forward contracts was a gain of $1.2 million and a loss of $1.2 million, respectively. For the nine months ended September 27, 2014 and September 28, 2013, the before-tax effect of foreign currency exchange forward contracts was a gain of $0.8 million and a loss of $1.4 million, respectively.

The fair value of derivative instruments not designated as hedging instruments in the Company’s condensed consolidated balance sheets was as follows (in thousands):



	As of September 27, 2014							As of December 28, 2013
	Gross Notional⁽¹⁾		Prepaid Expenses and Other Assets		Other Accrued Liabilities			Gross Notional⁽¹⁾		Prepaid Expenses and Other Assets		Other Accrued Liabilities
Foreign currency exchange forward contracts
Related to euro denominated receivables	$	20,980	—		$	(30	)	$	16,867	27		$	—
Related to British pound denominated receivables	165		—		—			13,271		—		(26		)
Related to restricted cash	1,287		—		(2		)	1,391		2		—
	$	22,432	$	—	$	(32	)	$	31,529	$	29	$	(26	)

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⁽¹⁾	Represents the face amounts of forward contracts that were outstanding as of the period noted.