Derivatives And Fair Value Measurements

12 Months Ended

Oct. 01, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives And Fair Value Measurements

Derivatives and Fair Value Measurements

All derivatives are recognized in the accompanying Consolidated Balance Sheets at their estimated fair value. The Company uses derivatives to manage the variability of foreign currency obligations and interest rates. The Company has cash flow hedges related to variable rate debt and forecasted foreign currency obligations, in addition to non-designated hedges to manage foreign currency exposures associated with certain foreign currency denominated assets and liabilities. The Company does not enter into derivatives for speculative purposes.

ASC Topic 815-10, “Derivatives and Hedging,” requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position. In accordance with ASC Topic 815-10, the Company designates some foreign currency exchange contracts and float-to-fixed interest rate derivative contracts as cash flow hedges of forecasted foreign currency expenses and of variable rate interest payments, respectively.

Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in “Accumulated other comprehensive loss” in the accompanying Consolidated Balance Sheets until earnings are affected by the variability of the cash flows. In the next twelve months, the Company estimates that $0.6 million of unrealized losses, net of tax, related to cash flow hedges will be reclassified from other comprehensive loss into earnings. Changes in the fair value of the non-designated derivatives related to recognized foreign currency denominated assets and liabilities are recorded in "Miscellaneous income (expense)" in the accompanying Consolidated Statements of Comprehensive Income.

The Company enters into forward currency exchange contracts for its Malaysian operations on a rolling basis. The Company had cash flow hedges outstanding with a notional value of $73.7 million as of October 1, 2016 and a notional value of $67.0 million as of October 3, 2015. These forward currency contracts fix the exchange rates for the settlement of future foreign currency obligations that have yet to be realized. The total fair value of the forward currency exchange contracts was a $0.5 million liability as of October 1, 2016 and an $9.4 million liability as of October 3, 2015.

The Company had additional forward currency exchange contracts outstanding as of October 1, 2016, with a notional value of $109.6 million; there were no such contracts outstanding as of October 3, 2015. The Company did not designate these derivative instruments as hedging instruments. In accordance with ASC Topic 815-10, the net settlement amount (fair value) related to these contracts is recorded on the Consolidated Balance Sheets as either a current or long-term asset or liability, depending on the term, and as an element of "Other income (expense)." The total fair value of these derivatives was a $0.1 millionasset as of October 1, 2016.

In 2013, the Company entered into a $75.0 million notional amount interest rate swap contract, which expires on May 5, 2017, related to $75.0 million of borrowings outstanding under the Credit Facility. This interest rate swap pays the Company variable interest at the one month LIBOR rate, and the Company pays the counterparty a fixed interest rate. The fixed interest rate for the contract is 0.875%. Based on the terms of the interest rate swap contract and the underlying borrowings outstanding under the Credit Facility, the interest rate contract was determined to be effective, and thus qualifies as a cash flow hedge. As such, any changes in the fair value of the interest rate swap are recorded in "Accumulated other comprehensive loss" on the accompanying Consolidated Balance Sheets until earnings are affected by the variability of cash flows. The total fair value of the interest rate swap contract as of October 1, 2016, was a $0.1 million liability and a $0.5 million liability as of October 3, 2015. The notional amount of the Company's interest rate swap was $75.0 million as of both October 1, 2016 and October 3, 2015.

The tables below present information regarding the fair values of derivative instruments (as defined in Note 1, "Description of Business and Significant Accounting Policies") and the effects of derivative instruments on the Company’s Consolidated Financial Statements:

Fair Values of Derivative Instruments
In thousands of dollars
	Asset Derivatives			Liability Derivatives
		October 1, 2016	October 3, 2015		October 1, 2016	October 3, 2015
Derivatives designated as hedging instruments	Balance Sheet Classification	Fair Value	Fair Value	Balance Sheet Classification	Fair Value	Fair Value
Interest rate swaps	Prepaid expenses and other	$—	$—	Current liabilities – Other	$132	$497
Forward contracts	Prepaid expenses and other	$—	$—	Current liabilities – Other	$486	$9,408

Fair Values of Derivative Instruments
In thousands of dollars
	Asset Derivatives			Liability Derivatives
		October 1, 2016	October 3, 2015		October 1, 2016	October 3, 2015
Derivatives not designated as hedging instruments	Balance Sheet Classification	Fair Value	Fair Value	Balance Sheet Classification	Fair Value	Fair Value
Forward contracts	Prepaid expenses and other	$182	$—	Current liabilities – Other	$130	$—

Derivative Impact on Accumulated Other Comprehensive Loss for the Twelve Months Ended
In thousands of dollars
Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) (“OCI”) on Derivatives (Effective Portion)
	October 1, 2016			October 3, 2015			September 27, 2014
Interest rate swaps	$	(16	)	$	(1,258	)	$	(393	)
Forward contracts	$	5,311		$	(15,660	)	$	1,198

Derivative Impact on Gain (Loss) Recognized in Income for the Twelve Months Ended
In thousands of dollars
Derivatives in Cash Flow Hedging Relationships	Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
		October 1, 2016			October 3, 2015			September 27, 2014
Interest rate swaps	Interest expense	$	(381	)	$	(579	)	$	(542	)
Forward contracts	Selling and administrative expenses	$	(350	)	$	(597	)	$	(106	)
Forward contracts	Cost of goods sold	$	(3,261	)	$	(4,843	)	$	(503	)
Treasury Rate Locks	Interest expense	$	320		$	324		$	321
Treasury Rate Locks	Income tax expense	$	—		$	—		$	70

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized on Derivatives in Income	Amount of Gain (Loss) on Derivatives Recognized in Income
		October 1, 2016		October 3, 2015		September 27, 2014
Forward contracts	Miscellaneous income (expense)	$	121	$	164	$	—

There were no gains or losses recognized in income for derivatives related to ineffective portions and amounts excluded from effectiveness testing for fiscal years 2016, 2015 and 2014.

The following table lists the fair values of liabilities of the Company’s derivatives as of October 1, 2016, by input level as defined in Note 1, "Description of Business and Significant Accounting Policies":

	Fair Value Measurements Using Input Levels Asset/ (Liability) (in thousands):
Fiscal year ended October 1, 2016	Level 1		Level 2			Level 3		Total
Derivatives
Interest rate swaps	$	—	$	(132	)	$	—	$	(132	)
Forward currency forward contracts	$	—	$	(434	)	$	—	$	(434	)
Fiscal year ended October 3, 2015
Derivatives
Interest rate swaps	$	—	$	(497	)	$	—	$	(497	)
Forward currency forward contracts	$	—	$	(9,408	)	$	—	$	(9,408	)

The fair value of interest rate swaps and foreign currency forward contracts is determined using a market approach, which includes obtaining directly or indirectly observable values from third parties active in the relevant markets. The primary input in the fair value of the interest rate swaps is the relevant LIBOR forward curve. Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for currency and interest rate forward curves.