Derivative Financial Instruments

12 Months Ended

Oct. 02, 2016

Derivative Financial Instruments

Derivative Financial Instruments

14.         Derivative Financial Instruments

              We use certain interest rate derivative contracts to hedge interest rate exposures on our variable rate debt. We enter into foreign currency derivative contracts with financial institutions to reduce the risk that cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. Our hedging program is not designated for trading or speculative purposes.

              We recognize derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as accounting hedges in our consolidated balance sheets as accumulated other comprehensive income (loss).

              In fiscal 2013, we entered into three interest rate swap agreements that we have designated as cash flow hedges to fix the variable interest rates on a portion of borrowings under our term loan facility. In the first quarter of fiscal 2014, we entered into two interest rate swap agreements that we designated as cash flow hedges to fix the variable interest rates on the borrowings under our term loan facility. At October 2, 2016 and September 27, 2015, the effective portion of our interest rate swap agreements designated as cash flow hedges before tax effect was $1.6 million and $2.3 million, respectively, all of which we expect to be reclassified from accumulated other comprehensive income (loss) to interest expense within the next 12 months.

              As of October 2, 2016, the notional principal, fixed rates and related expiration dates of our outstanding interest rate swap agreements are as follows:

Notional Amount (in thousands)		Fixed Rate			Expiration Date
$	44,203		1.36	%		May 2018
	44,203		1.34	%		May 2018
	44,203		1.35	%		May 2018
	22,102		1.23	%		May 2018
	22,102		1.24	%		May 2018

              The fair values of our outstanding derivatives designated as hedging instruments were as follows:

		Fair Value of Derivative Instruments as of
	Balance Sheet Location	October 2, 2016		September 27, 2015
		(in thousands)
Interest rate swap agreements	Other current liabilities	$	1,572	$	2,518

              The impact of the effective portions of derivative instruments in cash flow hedging relationships on income and other comprehensive income from our interest rate swap agreements was immaterial for the fiscal years ended October 2, 2016 and September 27, 2015. Additionally, there were no ineffective portions of derivative instruments. Accordingly, no amounts were excluded from effectiveness testing for our foreign currency forward contracts and interest rate swap agreements. We had no derivative instruments that were not designated as hedging instruments for fiscal 2016, 2015 and 2014.