Derivative Instruments And Hedging Activities

12 Months Ended

Sep. 30, 2011

Derivative Instruments And Hedging Activities [Abstract]

Derivative Instruments And Hedging Activities

9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company measures all derivatives at fair value on the Consolidated Balance Sheets. The accounting for gains or losses resulting from changes in the fair value of those derivatives depends upon the use of the derivative and whether it qualifies for hedge accounting. Changes in the fair value of derivatives that do not qualify for hedge accounting treatment must be recognized in earnings, together with elements excluded from effectiveness testing and the ineffective portion of a particular hedge.

The fair values of derivative instruments reported on the Company's Consolidated Balance Sheets were as follows:

	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	September 30, 2011		October 1, 2010		Balance Sheet Location	September 30, 2011		October 1, 2010
(In millions)		Fair Value		Fair Value			Fair Value		Fair Value
Derivative designated as hedging instruments:
Foreign exchange forward contracts	Prepaid Expenses	$	—	$	—	Accrued liabilities	$	—	$	0.5
Derivative not designated as hedging instruments:
Foreign exchange forward contracts	Prepaid Expenses		—		—	Accrued liabilities		—		—
Total derivatives		$	—	$	—		$	—	$	0.5

See Note 3, "Fair Value" and "Valuation of Derivative Instruments" under Critical Accounting Estimates in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding valuation of the Company's derivative instruments. Also see Note 1, "Summary of Significant Accounting Policies" to the Consolidated Financial Statements regarding credit risk associated with the Company's derivative instruments.

Cash Flow Hedging Activities

The Company has many transactions denominated in foreign currencies and addresses certain of those financial exposures through a risk management program that includes the use of derivative financial instruments. The Company sells products throughout the world, often in the currency of the customer's country, and may hedge certain of the larger foreign currency transactions when they are either not denominated in the relevant subsidiary's functional currency or the U.S. dollar. These foreign currency sales transactions are hedged using foreign currency forward contracts. The Company may use other derivative instruments in the future. The Company enters into foreign currency forward contracts primarily to reduce the effects of fluctuating foreign currency exchange rates. The Company does not enter into foreign currency forward contracts for speculative or trading purposes. The foreign currency forward contracts range from one to twelve months in maturity. As of September 30, 2011, the Company did not have any foreign currency forward contracts with an original maturity greater than twelve months.

The hedges of foreign currency denominated forecasted revenues are accounted for in accordance with ASC 815, pursuant to which the Company has designated its hedges of forecasted foreign currency revenues as cash flow hedges. The Company's designated cash flow hedges de-designate when the anticipated revenues associated with the transactions are recognized and the effective portion in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets is reclassified to "Revenues" in the Consolidated Statements of Earnings. Subsequent changes in fair value of the derivative instrument are recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Earnings to offset changes in fair value of the resulting non-functional currency receivables. For derivative instruments that are designated and qualified as cash flow hedges under ASC 815, the Company formally documents for each derivative instrument at the hedge's inception the relationship between the hedging instrument (foreign currency forward contract) and hedged item (forecasted foreign currency revenues), the nature of the risk being hedged, as well as its risk management objective and strategy for undertaking the hedge. The Company records the effective portion of the gain or loss on the derivative instrument designated and qualified as cash flow hedges in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets and reclassifies these amounts into "Revenues" in the Consolidated Statements of Earnings in the period during which the hedged transaction is recognized in earnings. The Company assesses hedge effectiveness both at the onset of the hedge and on an ongoing basis using regression analysis. The Company measures hedge ineffectiveness by comparing the cumulative change in the fair value of the effective component of the hedge contract with the cumulative change in the fair value of the hedged item. The Company recognizes any over performance of the derivative as ineffectiveness in "Revenues," and amounts not included in the assessment of effectiveness in "Cost of revenues" in the Consolidated Statements of Earnings. During fiscal years 2011, 2010 and 2009, the Company did not discontinue any cash flow hedges. At the inception of the hedge, the Company assesses whether the likelihood of meeting the forecasted cash flow is highly probable. As of September 30, 2011, all forecasted cash flows were still probable to occur. As of October 1, 2010, net unrealized loss on derivative instruments before tax, of $502,000, was included in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. As of September 30, 2011, net unrealized loss on derivative instruments before tax, of $11,000, was included in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets and is expected to be reclassified to earnings over the twelve months that follow.

The Company had the following outstanding foreign currency forward contracts that were entered into to hedge forecasted revenues and designated as a cash flow hedge:

	At September 30, 2011
(In millions)	Notional Value Sold
Japanese yen	$	20.1

The following table presents the amounts, before tax, recognized in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets and in the Consolidated Statements of Earnings that are related to the effective portion of the foreign currency forward contracts designated as cash flow hedges:

	Gain (Loss) Recognized in Other Comprehensive Income (Effective Portion)						Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Net Earnings (Effective Portion)		Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Net Earnings (Effective Portion)
	Fiscal Years								Fiscal Years
(in millions)	2011		2010		2009				2011		2010		2009
Foreign exchange contracts	$	(0.5)	$	0.4	$	6.8		Revenues	$	(1.0)	$	0.9	$	6.0

The following table presents the amounts recognized in the Consolidated Statements of Earnings that are related to (i) the ineffective portion of the cash flow hedges and (ii) the amount excluded from effectiveness testing of the cash flow hedges:

		Fiscal Years
(in millions)	Location of Gain (Loss) Recognized	2011		2010		2009
Ineffective portion of cash flow hedges —Gain (Loss)	Revenues	$	—	$	—	$	—
Amount excluded from assessment of effectiveness of cash flow hedges — Gain (Loss)	Cost of Revenues	$	—	$	—	$	(0.1	)

Balance Sheet Hedging Activities

The Company also hedges balance sheet exposures from its various subsidiaries and business units where the U.S. dollar is the functional currency. The Company enters into foreign currency forward contracts to minimize the short-term impact of foreign currency fluctuations on monetary assets and liabilities denominated in currencies other than the U.S. dollar functional currency. The foreign currency forward contracts are short term in nature, typically with maturity of approximately one month, and are based on the net forecasted balance sheet exposure. These hedges of foreign-currency-denominated assets and liabilities do not qualify for hedge accounting treatment and are not designated as hedging instruments under ASC 815. For derivative instruments not designated as hedging instruments, changes in their fair values are recognized in "Selling, general and administrative expenses" in the Consolidated Statements of Earnings. Changes in the values of these hedging instruments are offset by changes in the values of foreign-currency-denominated assets and liabilities. Variations from the forecasted foreign currency assets or liabilities, coupled with a significant currency rate movement, may result in a material gain or loss if the hedges are not effectively offsetting the change in value of the foreign currency asset or liability. Other than foreign exchange hedging activities, the Company has no other free-standing or embedded derivative instruments.

The Company had the following outstanding foreign currency forward contracts that were entered into to hedge balance sheet exposures from its various foreign subsidiaries and business units:

	At September 30, 2011
(In millions)	Notional Value Sold		Notional Value Purchased
Australian dollar	$	17.1	$	—
British pound		—		18.4
Danish krone		1.4		—
Euro		137.1		14.9
New Zealand dollar		3.1		—
Norwegian krone		7.4		—
Japanese yen		39.4		—
Swedish krone		2.4		—
Swiss franc		—		34.6
Totals	$	207.9	$	67.9

The following table presents the gains (losses) recognized in the Consolidated Statements of Earnings related to the foreign currency forward exchange contracts that are not designated as hedging instruments under ASC 815.

Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Net Earnings on Derivative
	Fiscal Years
(In millions)	2011		2010		2009
Selling, general and administrative expenses	$	2.3	$	10.1	$	(2.0	)

The gains (losses) on these derivative instruments were significantly offset by the gains (losses) resulting from the remeasurement of monetary assets and liabilities denominated in currencies other than the U.S. dollar functional currency.

Contingent Features

Certain of the Company's derivative instruments are subject to a master netting agreement which contains provisions that require the Company, in the event of a default, to settle the outstanding contracts in net liability positions by making settlement payments in cash or by setting off amounts owed to the counterparty against any credit support or collateral held by the counterparty. The counterparty's right of set-off is not limited to the derivative instruments and applies to other rights held by the counterparty. Pursuant to the master netting agreement, an event of default includes the Company's failure to pay the counterparty under the derivative instruments, voluntary or involuntary bankruptcy, the Company's failure to repay an aggregate of $25 million or more in debts, and deterioration of creditworthiness of the surviving entity when the Company merges or transfers its assets or liabilities to another entity. As of September 30, 2011 and October 1, 2010, the Company did not have significant outstanding derivative instruments with credit-risk-related contingent features that were in a net liability position.