Derivative Instruments & Hedging Activities

12 Months Ended

Jun. 29, 2014

Foreign Currency Derivatives [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Instruments & Hedging Activities:

The Company enters into interest rate swaps to manage a portion of its interest rate risk from financing certain dealer and distributor inventories through a third party financing source. The swaps are designated as cash flow hedges and are used to effectively fix the interest payments to a third party financing source, exclusive of lender spreads, ranging from 1.17% to 1.60% for a notional principal amount of $95 million with expiration dates ranging from July 2017 to May 2019.

The Company periodically enters into forward foreign currency contracts to hedge the risk from forecasted third party and intercompany sales or payments denominated in foreign currencies. These obligations generally require the Company to exchange foreign currencies for U.S. Dollars, Euros, Australian Dollars, Mexican Pesos, Canadian Dollars or Japanese Yen. These contracts generally do not have a maturity of more than twenty-four months.

The Company uses raw materials that are subject to price volatility. The Company hedges a portion of its exposure to the variability of cash flows associated with commodities used in the manufacturing process by entering into forward purchase contracts or commodity swaps. Derivative contracts designated as cash flow hedges are used by the Company to reduce exposure to variability in cash flows associated with future purchases of natural gas and aluminum. These contracts generally do not have a maturity of more than twenty-four months.

The Company has considered the counterparty credit risk related to all its foreign currency and commodity derivative contracts and does not deem any counterparty credit risk material at this time.

The notional amount of derivative contracts outstanding at the end of the period is indicative of the level of the Company’s derivative activity during the period. As of June 29, 2014 and June 30, 2013, the Company had the following outstanding derivative contracts (in thousands):

Contract		Notional Amount
		June 29, 2014	June 30, 2013
Interest Rate:
LIBOR Interest Rate (U.S. Dollars)	Fixed	95,000	95,000
Foreign Currency:
Australian Dollar	Sell	19,904	6,392
Canadian Dollar	Sell	3,100	—
Euro	Sell	49,300	31,000
Japanese Yen	Buy	530,000	905,000
Mexican Peso	Sell	3,000	3,345
Commodity:
Aluminum (Metric Tons)	Buy	—	18
Natural Gas (Therms)	Buy	5,686	5,423

The location and fair value of derivative instruments reported in the Consolidated Balance Sheets are as follows (in thousands):

Balance Sheet Location	Asset (Liability) Fair Value
	June 29, 2014			June 30, 2013
Interest rate contracts:
Other Long-Term Assets, Net	$	43		$	257
Other Long-Term Liabilities	(1,209		)	(1,020		)
Foreign currency contracts:
Other Current Assets	337			1,752
Other Long-Term Assets, Net	12			—
Accrued Liabilities	(665		)	(1,138		)
Other Long-Term Liabilities	(9		)	—
Commodity contracts:
Other Current Assets	39			—
Accrued Liabilities	(35		)	(3,250		)
Other Long-Term Liabilities	(14		)	(5		)
	$	(1,501	)	$	(3,404	)

The effect of derivatives designated as hedging instruments on the Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows (in thousands):

	Twelve months ended June 29, 2014
	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on  Derivatives, Net of Taxes (Effective Portion)			Classification of Gain (Loss)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Recognized in Earnings (Ineffective  Portion)
Interest rate contracts	$	(254	)	Net Sales	$	(1,209	)	$	—
Foreign currency contracts – sell	(717		)	Net Sales	(1,024		)	—
Foreign currency contracts – buy	182			Cost of Goods Sold	(1,109		)	—
Commodity contracts	3,378			Cost of Goods Sold	(5,630		)	—
	$	2,589			$	(8,972	)	$	—

	Twelve months ended June 30, 2013
	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on  Derivatives, Net of Taxes (Effective Portion)			Classification of Gain (Loss)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Recognized in Earnings (Ineffective  Portion)
Interest rate contracts	$	962		Net Sales	$	—		$	—
Foreign currency contracts – sell	102			Net Sales	(55		)	—
Foreign currency contracts – buy	(177		)	Cost of Goods Sold	(1,968		)	—
Commodity contracts	3,094			Cost of Goods Sold	(9,644		)
	$	3,981			$	(11,667	)	$	—

	Twelve months ended July 1, 2012
	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on  Derivatives, Net of Taxes (Effective Portion)			Classification of Gain (Loss)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Recognized in Earnings (Ineffective  Portion)
Interest rate contracts	$	(1,428	)	Net Sales	$	—		$	—
Foreign currency contracts – sell	1,553			Net Sales	4,031			—
Foreign currency contracts – buy	11			Cost of Goods Sold	132			—
Commodity contracts	(5,547		)	Cost of Goods Sold	(7,292		)	6
	$	(5,411	)		$	(3,129	)	$	6

During the next twelve months, the amount of the June 29, 2014 Accumulated Other Comprehensive Income (Loss) balance that is expected to be reclassified into earnings is $0.4 million.

The Company enters into forward exchange contracts to hedge purchases and sales that are denominated in foreign currencies. The terms of these currency derivatives do not exceed twenty-four months, and the purpose is to protect the Company from the risk that the eventual dollars being transferred will be adversely affected by changes in exchange rates.

The Company has forward foreign exchange contracts to sell foreign currency, with the Euro as the most significant. These contracts are used to hedge foreign currency collections on sales of inventory. The Company also has forward contracts to purchase foreign currencies. The Company’s foreign currency forward contracts are carried at fair value based on current exchange rates.

The Company had the following forward currency contracts outstanding at the end of fiscal 2014:

Hedge		In Thousands
		Notional Value	Contract Value	Fair Value	(Gain) Loss at Fair Value		Conversion Currency	Latest Expiration Date
Currency	Contract
Australian Dollar	Sell	19,904	18,115	18,586	471		U.S.	June 2015
Canadian Dollar	Sell	3,100	2,859	2,899	40		U.S.	April 2015
Euro	Sell	49,300	67,529	67,379	(149	)	U.S.	December 2015
Japanese Yen	Buy	530,000	5,192	5,229	(37	)	U.S.	January 2015
Mexican Peso	Sell	3,000	231	231	—		U.S.	July 2014

The Company had the following forward currency contracts outstanding at the end of fiscal 2013:

Hedge		In Thousands
		Notional Value	Contract Value	Fair Value	(Gain) Loss at Fair Value		Conversion Currency	Latest Expiration Date
Currency	Contract
Australian Dollar	Sell	6,392	6,489	5,798	(691	)	U.S.	March 2014
Euro	Sell	31,000	41,037	40,377	(660	)	U.S.	June 2014
Japanese Yen	Buy	905,000	9,885	9,137	747		U.S.	June 2014
Mexican Peso	Sell	3,345	265	255	(10	)	U.S.	December 2013

The Company continuously evaluates the effectiveness of its hedging program by evaluating its foreign exchange contracts compared to the anticipated underlying transactions. The Company did not have any ineffective currency hedges in fiscal 2014, 2013, or 2012.