O.	Derivative Financial Instruments

From time to time, the Company enters into derivative instruments to manage volatility arising from risks relating to interest rates and foreign exchange. The Company does

not

purchase, hold or sell derivative financial instruments for trading purposes. The Company’s practice is to terminate derivative transactions if the underlying asset or liability matures or is sold or terminated, or if it determines the underlying forecasted transaction is

longer probable of occurring.

The Company reports all derivative instruments on its consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of transactions entered into for hedging purposes.

Interest Rate Swap Contracts

The Company has

one

outstanding interest rate swap contract as of

December 27, 2019,

which it entered into on

April 22, 2019.

It has been designated as a cash flow hedge in accordance with ASC

815,

Derivatives and Hedging.

The primary purpose of the Company’s cash flow hedging activities is to manage the potential changes in value associated with interest payments on the Company’s LIBOR-based indebtedness. The Company records gains and losses on interest rate swap contracts qualifying as cash flow hedges in accumulated other comprehensive loss to the extent that these hedges are effective and until the Company recognizes the underlying transactions in net earnings, at which time these gains and losses are recognized in interest expense on its consolidated statements of operations and comprehensive (loss) income. Cash flows from derivative financial instruments are classified as cash flows from financing activities on the consolidated statements of cash flows. These contracts generally have original maturities of greater than

months.

Net unrealized after-tax losses related to cash flow hedging activities that were included in accumulated other comprehensive loss were

$506

and

$509

as of

December 27, 2019

and

June 30, 2019,

respectively. The unrealized amounts in accumulated other comprehensive loss will fluctuate based on changes in the fair value of open contracts during each reporting period.

The Company estimates that

$144

of net unrealized losses related to cash flow hedging activities included in accumulated other comprehensive loss will be reclassified into earnings within the next

twelve

months.

For

eign Currency Forward Contracts

The Company has

outstanding foreign currency forward exchange contracts at

December 27, 2019

or at

June 30, 2019.

Fair Value of Derivative Instruments

The fair value of derivative instruments included in the condensed consolidated balance sheets were as follows:

	Balance Sheet Location	December 27, 2019		June 30, 2019
Derivative designated as hedge:
Interest rate swap	Accrued liabilities	$	144	$	122
Interest rate swap	Other long-term liabilities		518		544

The impact of the Company’s derivative instruments on the consolidated statement of operations and comprehensive (loss) income for the quarter and

two

quarters ended

December 27, 2019

and

December 28, 2018,

respectively, was as follows:

	Statement of Comprehensive	For the Quarter Ended				For the Two Quarters Ended
	Income Location	December 27, 2019		December 28, 2018		December 27, 2019		December 28, 2018
Derivative designated as hedge:
Interest rate swap	Interest expense	$	31	$	-	$	42	$	-
Interest rate swap	Unrealized income on cash flow hedge		146		-		3		-