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Derivatives and Fair Value Measurements
 12 Months Ended
Sep. 28, 2019
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. The Company has cash flow hedges related to 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.
The Company designates some foreign currency exchange contracts as cash flow hedges of forecasted foreign currency expenses. 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) income 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, net" in the accompanying Consolidated Statements of Comprehensive Income.
The Company enters into forward currency exchange contracts for its operations in Malaysia and Mexico on a rolling basis. The Company had cash flow hedges outstanding with a notional value of $80.0 million as of September 28, 2019, and a notional value of $74.0 million as of September 29, 2018. 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 $0.6 million liability as of September 28, 2019, and a $1.7 million liability as of September 29, 2018.
The Company had additional forward currency exchange contracts outstanding as of September 28, 2019, with a notional value of $34.4 million; there were $28.6 million such contracts outstanding as of September 29, 2018. The Company did not designate these derivative instruments as hedging instruments. 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 "Miscellaneous, net." The total fair value of these derivatives was a $0.9 million asset as of September 28, 2019, and a $0.1 million liability as of September 29, 2018.
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)
  
 
Asset Derivatives
 
Liability Derivatives
  
 
  
 
September 28,
2019
 
September 29,
2018
 
  
 
September 28,
2019
 
September 29,
2018
Derivatives designated as hedging instruments
 
Balance Sheet
Classification
 
Fair Value
 
Fair Value
 
Balance Sheet
Classification
 
Fair Value
 
Fair Value
Forward currency forward contracts
 
Prepaid expenses and other
 
$
156

 
$
292

 
Other accrued liabilities
 
$
798

 
$
1,984


Fair Values of Derivative Instruments (in thousands)
  
 
Asset Derivatives
 
Liability Derivatives
  
 
  
 
September 28,
2019
 
September 29,
2018
 
  
 
September 28,
2019
 
September 29,
2018
Derivatives not designated as hedging instruments
 
Balance Sheet
Classification
 
Fair Value
 
Fair Value
 
Balance Sheet
Classification
 
Fair Value
 
Fair Value
Forward currency forward contracts
 
Prepaid expenses and other
 
$
912

 
$
42

 
Other accrued liabilities
 
$
54

 
$
81


Derivative Impact on Accumulated Other Comprehensive (Loss) Income ("OCL") (in thousands)
for the Twelve Months Ended
Derivatives in Cash Flow Hedging Relationships
 
Amount of (Loss) Gain Recognized in OCL on Derivatives (Effective Portion)  
 
September 28, 2019
 
September 29, 2018
 
September 30, 2017
Interest rate swaps
 
$
—

 
$
—

 
$
(10
)
Forward currency forward contracts
 
$
(629
)
 
$
2,579

 
$
(848
)

Derivative Impact on (Loss) Gain Recognized in Income (in thousands)
for the Twelve Months Ended
Derivatives in Cash Flow Hedging Relationships
 
Classification of (Loss) Gain Reclassified from Accumulated OCL into Income (Effective Portion)
 
Amount of (Loss) Gain Reclassified from Accumulated OCL into Income (Effective Portion)
 
 
September 28, 2019
 
September 29, 2018
 
September 30, 2017
Interest rate swaps
 
Interest expense
 
$
—

 
$
—

 
$
(142
)
Forward currency forward contracts
 
Selling and administrative expenses
 
$
(173
)
 
$
619

 
$
(317
)
Forward currency forward contracts
 
Cost of sales
 
$
(1,506
)
 
$
5,676

 
$
(3,041
)
Treasury rate locks
 
Interest expense
 
$
—

 
$
226

 
$
321

Interest rate swaps
 
Income tax expense
 
$
—

 
$
—

 
$
(84
)

Derivatives Not Designated as Hedging Instruments
 
Location of Gain Recognized on Derivatives in Income
 
Amount of Gain on Derivatives Recognized in Income
 
 
September 28, 2019
 
September 29, 2018
 
September 30, 2017
Forward currency forward contracts
 
Miscellaneous, net
 
$
2,098

 
$
263

 
$
2,153


There were no gains or losses recognized in income for derivatives related to ineffective portions and amounts excluded from effectiveness testing for fiscal years 2019, 2018 and 2017.
The following table lists the fair values of liabilities of the Company’s derivatives as of September 28, 2019 and September 29, 2018, 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 September 28, 2019
 
Level 1
 
Level 2
 
Level 3
 
Total
Derivatives
 
 
 
 
 
 
 
 
Forward currency forward contracts
 
$
—

 
$
216

 
$
—

 
$
216

 
 
 
 
 
 
 
 
 
Fiscal year ended September 29, 2018
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
Forward currency forward contracts
 
$
—

 
$
(1,731
)
 
$
—

 
$
(1,731
)

The fair value of 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. Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for currency and interest rate forward curves.