DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Sep. 27, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative Financial Instruments

As of September 27, 2014, the Company had outstanding foreign currency forward contracts with a total notional amount of $68.7 million. The maturity dates for these contracts extend through December 2017. For the three months ended September 27, 2014, the Company entered into foreign currency forward contracts of $11.6 million and settled $5.3 million of such contracts. For the three months ended September 28, 2013, the Company entered into $5.0 million of foreign currency forward contracts and settled $6.2 million of such contracts.

Subsequent to September 27, 2014, the Company entered into an interest rate swap contract with an effective date of September 1, 2015 and a termination date of September 3, 2019 with a notional amount of $25.0 million related to the borrowings outstanding under the Term Loan and line of credit. This interest rate swap pays the Company variable interest at the one month LIBOR rate, and the Company pays the counter party a fixed interest rate. The fixed interest rate for the contract is 1.97% that replaces the one month LIBOR rate component of our contractual interest to be paid to WFB as part of our debt facilities. Based on the terms of the interest rate swap contract and the underlying borrowings outstanding under the Term Loan, the interest rate contract was determined to be effective, and thus qualifies as a cash flow hedge.

The following table summarizes the fair value of derivative instruments in the Consolidated Balance Sheet as of September 27, 2014 and June 28, 2014 (in thousands):

		September 27, 2014			June 28, 2014
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Fair Value			Fair Value
Foreign currency forward contracts	Other current assets	$	1,172		$	2,034
Foreign currency forward contracts	Other long-term assets	$	234		$	1,607
Foreign currency forward contracts	Other current liabilities	$	(35	)	$	—
Foreign currency forward contracts	Other long-term liabilities	$	(436	)	$	—

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the three months ended September 27, 2014 and September 28, 2013, respectively (in thousands):

Derivatives Designated as Hedging Instruments	AOCI Balance as of June 28, 2014		Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Cost of  Sales			AOCI Balance as of September 27, 2014
Settled foreign currency forward contracts for the three months ended September 27, 2014	$	386	$	158		$	(544	)	$	—
Unsettled foreign currency forward contracts	2,017		(1,350		)	—			667
Total	$	2,403	$	(1,192	)	$	(544	)	$	667
Derivatives Designated as Hedging Instruments	AOCI Balance as of June 29, 2013		Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Cost of  Sales			AOCI Balance as of September 28, 2013
Settled foreign currency forward contracts for the three months ended September 28, 2013	$	15	$	60		$	(75	)	$	—
Unsettled foreign currency forward contracts	1,298		(239		)	—			1,059
Total	$	1,313	$	(179	)	$	(75	)	$	1,059

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 September 27, 2014, the net amount of unrealized gain expected to be reclassified into earnings within the next 12 months is approximately $0.8 million. As of September 27, 2014, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.