Derivative Instruments and Hedging Activities

6 Months Ended

Mar. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

All derivatives, whether designated in hedging relationships or not, are recorded on the condensed consolidated balance sheet at fair value. We enter into foreign exchange forward contracts to minimize the risks of foreign currency fluctuation of specific assets and liabilities on the balance sheet; these are not designated as hedging instruments.

We maintain operations in various countries outside of the United States and have foreign subsidiaries that manufacture and sell our products in various global markets. The majority of our sales are transacted in U.S. dollars. However, we do generate revenues in other currencies, primarily the Euro, the Japanese Yen and the Korean Won. As a result, our earnings, cash flows and cash balances are exposed to fluctuations in foreign currency exchange rates. We attempt to limit these exposures through financial market instruments. We utilize derivative instruments, primarily forward contracts with maturities of two months or less, to manage our exposure associated with anticipated cash flows and net asset and liability positions denominated in foreign currencies. Gains and losses on the forward contracts are mitigated by gains and losses on the underlying instruments. We do not use derivative financial instruments for speculative or trading purposes. If a financial counterparty to any of our hedging arrangements experiences financial difficulties or is otherwise unable to honor the terms of the foreign currency hedge, we may experience material financial losses.

For derivative instruments that are not designated as hedging instruments, gains and losses are recognized in other income (expense).

The outstanding notional contract and fair value amounts of hedge contracts, with maximum maturity of two months, are as follows (in thousands):

	U.S. Notional Contract Value						U.S. Notional Fair Value
	March 31, 2012			October 1, 2011			March 31, 2012			October 1, 2011
Euro currency hedge contracts
Purchase	$	60,133		$	42,488		$	61,377		$	42,103
Sell	—			—			—			—
Net	$	60,133		$	42,488		$	61,377		$	42,103
Other foreign currency hedge contracts
Purchase	$	—		$	2,351		$	—		$	2,355
Sell	(43,565		)	(16,783		)	(43,647		)	(16,221		)
Net	$	(43,565	)	$	(14,432	)	$	(43,647	)	$	(13,866	)

The fair value of our derivative instruments are included in prepaid expenses and other assets and in other current liabilities in our Condensed Consolidated Balance Sheets; such amounts were not material as of March 31, 2012 and October 1, 2011.

The amount of non-designated derivative instruments’ gain (loss) in the Condensed Consolidated Statements of Operations for the three and six months endedMarch 31, 2012 and April 2, 2011 is as follows (in thousands):

	Amount of Gain or (Loss) Recognized in
	Income on Derivatives
	Three Months Ended			Six Months Ended
	March 31, 2012			March 31, 2012
Derivatives not designated as hedging instruments
Foreign exchange contracts	$	(1,571	)	$	411

	Amount of Gain or (Loss) Recognized in
	Income on Derivatives
	Three Months Ended		Six Months Ended
	April 2, 2011		April 2, 2011
Derivatives not designated as hedging instruments
Foreign exchange contracts	$	2,188	$	1,084