DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Apr. 01, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative Financial Instruments

As of April 1, 2017, the Company had outstanding foreign currency forward contracts and swaps with a total notional amount of $60.7 million. The maturity dates for these contracts and swaps extend through September 2019. For the three months ended April 1, 2017, the Company did not enter into foreign currency forward contracts and settled $5.2 million of such contracts. During the same period of the previous year, the Company entered into $7.0 million of foreign currency forward contracts and settled $5.7 million of such contracts.

For the nine months ended April 1, 2017, the Company entered into foreign currency forward contracts of $6.7 million and settled $15.5 million of such contracts. During the same period of the previous year, the Company entered into foreign currency forward contracts of $19.0 million and settled $16.3 million of such contracts.

As of April 1, 2017, the aggregate notional amount of the Company’s outstanding foreign currency contracts and swaps along with their unrealized gains (losses) are expected to mature as summarized below (in thousands):

Quarter Ending	Notional Contracts and Swaps in MXN		Notional Contracts and Swaps in USD		Estimated Fair Value
July 1, 2017	$	72,696	$	5,027	$	(1,171	)
September 30, 2017	$	76,192	$	5,395	$	(1,404	)
December 30, 2017	$	88,558	$	6,162	$	(1,581	)
March 31, 2018	$	90,812	$	5,713	$	(1,077	)
June 30, 2018	$	95,500	$	5,811	$	(995	)
September 29, 2018	$	90,443	$	5,301	$	(796	)
December 29, 2018	$	125,328	$	6,746	$	(584	)
March 30, 2019	$	138,472	$	7,005	$	(281	)
June 29, 2019	$	142,947	$	6,828	$	30
September 28, 2019	$	148,468	$	6,740	$	307

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. 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 term loan. 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 April 1, 2017 and July 2, 2016 (in thousands):

		April 1, 2017			July 2, 2016
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Fair Value			Fair Value
Foreign currency forward contracts	Other long-term assets	$	337		$	136
Foreign currency forward contracts	Other current liabilities	$	(5,233	)	$	(4,670	)
Foreign currency forward contracts & swaps	Other long-term liabilities	$	(2,656	)	$	(6,442	)
Interest rate swap	Other current liabilities	$	(113	)	$	(264	)
Interest rate swap	Other long-term liabilities	$	(25	)	$	(234	)

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the three months ended April 1, 2017 and April 2, 2016, respectively (in thousands):

Derivatives Designated as Hedging Instruments	Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	AOCI Balance as of December 31, 2016			Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Income		AOCI Balance as of April 1, 2017
Forward contracts & swaps	Cost of sales	$	(9,701	)	$	3,155		$	1,562	$	(4,984	)
Interest rate swap	Interest expense	(138		)	(7		)	53		(92		)
Total		$	(9,839	)	$	3,148		$	1,615	$	(5,076	)
Derivatives Designated as Hedging Instruments	Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	AOCI Balance as of December 26, 2015			Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Income		AOCI Balance as of April 2, 2016
Forward contracts & swaps	Cost of sales	$	(6,769	)	$	(589	)	$	1,313	$	(6,045	)
Interest rate swap	Interest expense	(287		)	(142		)	95		(334		)
Total		$	(7,056	)	$	(731	)	$	1,408	$	(6,379	)

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the nine months ended April 1, 2017 and April 2, 2016, respectively (in thousands):

Derivatives Designated as Hedging Instruments	Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	AOCI Balance as of July 2, 2016			Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Income		AOCI Balance as of April 1, 2017
Forward contracts & swaps	Cost of sales	$	(7,245	)	$	(1,751	)	$	4,012	$	(4,984	)
Interest rate swap	Interest expense	(328		)	34			202		(92		)
Total		$	(7,573	)	$	(1,717	)	$	4,214	$	(5,076	)
Derivatives Designated as Hedging Instruments	Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	AOCI Balance as of June 27, 2015			Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Income		AOCI Balance as of April 2, 2016
Forward contracts & swaps	Cost of sales	$	(4,487	)	$	(4,479	)	$	2,921	$	(6,045	)
Interest rate swap	Interest expense	(276		)	(268		)	210		(334		)
Total		$	(4,763	)	$	(4,747	)	$	3,131	$	(6,379	)

As of April 1, 2017, the net amount of unrealized loss expected to be reclassified into earnings within the next 12 months is approximately $3.5 million. As of April 1, 2017, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.