Derivative Financial Instruments

As of March 31, 2018, the Company had outstanding foreign currency forward contracts and swaps with a total notional amount of $45.6 million. The maturity dates for these contracts and swaps extend through December 2019. For the three months ended March 31, 2018, the Company did not enter into any foreign currency forward contracts and settled $5.7 million of such contracts. During the same period of the previous year, the Company did not enter into foreign currency forward contracts and settled $5.2 million of such contracts.

For the nine months ended March 31, 2018, the Company entered into foreign currency forward contracts of $7.2 million and settled $22.3 million of such contracts. During the same period of the previous year, the Company entered into foreign currency forward contracts of $6.7 million and settled $15.5 million of such contracts.

As of March 31, 2018, 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
June 30, 2018	$	95,500	$	5,811	$	(592	)
September 29, 2018	$	90,443	$	5,301	$	(426	)
December 29, 2018	$	125,328	$	6,746	$	(87	)
March 30, 2019	$	137,944	$	6,979	$	248
June 29, 2019	$	142,947	$	6,828	$	556
September 28, 2019	$	148,468	$	6,740	$	826
December 28, 2019	$	152,613	$	7,187	$	507

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 March 31, 2018 and July 1, 2017 (in thousands):



		March 31, 2018			July 1, 2017
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Fair Value			Fair Value
Foreign currency forward contracts & swaps	Other current assets	$	248		$	—
Foreign currency forward contracts & swaps	Other long-term assets	$	1,889		$	1,010
Foreign currency forward contracts & swaps	Other current liabilities	$	(1,105	)	$	(4,226	)
Foreign currency forward contracts & swaps	Other long-term liabilities	$	—		$	(886	)
Interest rate swap	Other current assets	$	9		$	—
Interest rate swap	Other long-term assets	$	8		$	—
Interest rate swap	Other current liabilities	$	(3	)	$	(81	)
Interest rate swap	Other long-term liabilities	$	—		$	(22	)

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 31, 2018 and April 1, 2017, 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 30, 2017			Effective Portion Recorded In AOCI ⁽¹⁾			Effective Portion Reclassified From AOCI Into Income		AOCI Balance as of March 31, 2018
Forward contracts & swaps	Cost of sales	$	(2,972	)	$	2,830		$	897	$	755
Interest rate swap	Interest expense	(16		)	13			14		11
Total		$	(2,988	)	$	2,843		$	911	$	766

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	)

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 31, 2018 and April 1, 2017, 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 1, 2017			Effective Portion Recorded In AOCI ⁽¹⁾			Effective Portion Reclassified From AOCI Into Income		AOCI Balance as of March 31, 2018
Forward contracts & swaps	Cost of sales	$	(2,707	)	$	39		$	3,423	$	755
Interest rate swap	Interest expense	(68		)	12			67		11
Total		$	(2,775	)	$	51		$	3,490	$	766

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	)

(1) The effective portion recorded in AOCI for the three and nine months ended March 31, 2018 is net of the adoption of ASU 2018-02 which required a reclassification from AOCI to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act.

As of March 31, 2018, the net amount of unrealized loss expected to be reclassified into earnings within the next 12 months is approximately $0.7 million. As of March 31, 2018, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.