DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Dec. 27, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative Financial Instruments

As of December 27, 2014, the Company had outstanding foreign currency forward contracts with a total notional amount of $69.4 million. The maturity dates for these contracts extend through March 2018. For the three months ended December 27, 2014, the Company entered into foreign currency forward contracts of $5.7 million and settled $5.0 million of such contracts. During the same period of the previous year, the Company entered into $5.2 million of foreign currency forward contracts and settled $5.7 million of such contracts.

For the six months ended December 27, 2014, the Company entered into forward contracts of $17.3 million and settled $10.3 million of such contracts. During the same period of the previous year, the Company entered into foreign currency forward contracts of $10.2 million and settled $11.9 million of such contracts.

On October 1, 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 December 27, 2014 and June 28, 2014 (in thousands):

		December 27, 2014			June 28, 2014
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Fair Value			Fair Value
Foreign currency forward contracts	Other current assets	$	169		$	2,034
Foreign currency forward contracts	Other long-term assets	$	—		$	1,607
Foreign currency forward contracts	Other current liabilities	$	(1,074	)	$	—
Foreign currency forward contracts	Other long-term liabilities	$	(3,347	)	$	—
Interest rate swaps	Other current liabilities	$	(99	)	$	—
Interest rate swaps	Other long-term liabilities	$	(114	)	$	—

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

Derivatives Designated as Hedging Instruments	AOCI Balance as of September 27, 2014			Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Cost of  Sales			AOCI Balance as of December 27, 2014
Settled foreign currency forward contracts for the three months ended December 27, 2014	$	237		$	9		$	(246	)	$	—
Unsettled foreign currency forward contracts	380			(3,186		)	—			(2,806		)
Unsettled interest rate swaps	—			(141		)	—			(141		)
Total	$	617		$	(3,318	)	$	(246	)	$	(2,947	)
Derivatives Designated as Hedging Instruments	AOCI Balance as of September 28, 2013			Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Cost of  Sales			AOCI Balance as of December 28, 2013
Settled foreign currency forward contracts for the three months ended December 28, 2013	$	(42	)	$	55		$	(13	)	$	—
Unsettled foreign currency forward contracts	1,101			524			—			1,625
Total	$	1,059		$	579		$	(13	)	$	1,625

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the six months ended December 27, 2014 and December 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 December 27, 2014
Settled foreign currency forward contracts for the six months ended December 27, 2014	$	731	$	59		$	(790	)	$	—
Unsettled foreign currency forward contracts	1,672		(4,478		)	—			(2,806		)
Unsettled interest rate swaps	—		(141		)	—			(141		)
Total	$	2,403	$	(4,560	)	$	(790	)	$	(2,947	)
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 December 28, 2013
Settled foreign currency forward contracts for the six months ended December 28, 2013	$	4	$	84		$	(88	)	$	—
Unsettled foreign currency forward contracts	1,309		316			—			1,625
Total	$	1,313	$	400		$	(88	)	$	1,625

The Company does not enter into derivative instruments for trading or speculative purposes. The Company’s counterparties to the foreign currency forward contracts and interest rate swaps 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 December 27, 2014, the net amount of unrealized loss expected to be reclassified into earnings within the next 12 months is approximately $0.7 million. As of December 27, 2014, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.