DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Mar. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative Financial Instruments

The Company has entered into foreign currency forward contracts which are accounted for as cash flow hedges in accordance with ASC 815, Derivatives and Hedging. The effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income and is reclassified into earnings in the same period in which the underlying hedged transaction affects earnings. The derivative’s effectiveness represents the change in fair value of the hedge that offsets the change in fair value of the hedged item.

The Company transacts business in Mexico and is subject to the risk of foreign currency exchange rate fluctuations. The Company enters into foreign currency forward contracts to manage the foreign currency fluctuations for Mexican peso denominated payroll, utility, tax, and other local expenses. The foreign currency forward contracts have terms that were effective to the underlying transactions being hedged.

As of March 30, 2013, the Company had outstanding foreign currency forward contracts with a total notional amount of $62.2 million. These contract maturity dates extend through March 2016. The Company entered into $10.9 million of foreign currency forward contracts and settled $5.8 million of foreign currency forward contracts during the three months ended March 30, 2013. For the three months ended March 31, 2012, the Company entered into foreign currency forward contracts of $5.0 million and settled $5.9 million of such contracts.

For the nine months ended March 30, 2013, the Company entered into forward contracts of $21.5 million and settled $17.0 million of such contracts. During the same period of the previous year, the Company entered into foreign currency forward contracts of $17.2 million and settled $14.1 million of such contracts.

The following table summarizes the fair value of derivative instruments in the Consolidated Balance Sheets as of March 30, 2013 and June 30, 2012 (in thousands):

		March 30, 2013			June 30, 2012
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Fair Value			Fair Value
Foreign currency forward contracts	Other current assets	$	953		$	199
Foreign currency forward contracts	Other long-term assets	$	3,332		$	659
Foreign currency forward contracts	Other current liabilities	$	(3	)	$	(923	)
Foreign currency forward contracts	Other long-term liabilities	$	—		$	(928	)

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the three months ended March 30, 2013 and March 31, 2012, respectively (in thousands):

Derivatives Designated as Hedging Instruments	AOCI Balance as of December 29, 2012			Effective Portion Recorded In AOCI		Effective Portion Reclassified From AOCI Into Cost of  Sales			AOCI Balance as of March 30, 2013
Settled foreign currency forward contracts for the three months ended March 30, 2013	$	(9	)	$	184	$	(175	)	$	—
Unsettled foreign currency forward contracts	373			2,449		—			2,822
Total	$	364		$	2,633	$	(175	)	$	2,822
Derivatives Designated as Hedging Instruments	AOCI Balance as of December 31, 2011			Effective Portion Recorded In AOCI		Effective Portion Reclassified From AOCI Into Cost of  Sales			AOCI Balance as of March 31, 2012
Settled foreign currency forward contracts for the three months ended March 31, 2012	$	(167	)	$	217	$	(50	)	$	—
Unsettled foreign currency forward contracts	(2,184		)	2,134		—			(50		)
Total	$	(2,351	)	$	2,351	$	(50	)	$	(50	)

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the nine months ended March 30, 2013 and March 31, 2012, respectively (in thousands):

Derivatives Designated as Hedging Instruments	AOCI Balance as of June 30, 2012			Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Cost of  Sales			AOCI Balance as of March 30, 2013
Settled foreign currency forward contracts for the nine months ended March 30, 2013	$	(162	)	$	675		$	(513	)	$	—
Unsettled foreign currency forward contracts	(497		)	3,319			—			2,822
Total	$	(659	)	$	3,994		$	(513	)	$	2,822
Derivatives Designated as Hedging Instruments	AOCI Balance as of July 2, 2011			Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Cost of  Sales			AOCI Balance as of March 31, 2012
Settled foreign currency forward contracts for the nine months ended March 31, 2012	$	800		$	(684	)	$	(116	)	$	—
Unsettled foreign currency forward contracts	940			(990		)	—			(50		)
Total	$	1,740		$	(1,674	)	$	(116	)	$	(50	)

The Company does not enter into derivative instruments for trading or speculative purposes. The Company’s counterparties to the foreign currency forward contracts are major financial institutions. These institutions do not require collateral for the contracts and the Company believes that the risk of the counterparties failing to meet their contractual obligations is remote. As of March 30, 2013, the net amount of unrealized gain expected to be reclassified into earnings within the next 12 months is approximately $0.6 million.

As of March 30, 2013, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.