DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Jul. 02, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

As of July 2, 2022, the Company did not have any outstanding foreign currency forward contracts. During the fiscal year ended July 2, 2022, the Company entered into $13.9 million of foreign currency forward contracts and settled $24.6 million of such contracts. During the fiscal year ended July 3, 2021, the Company did not enter into any foreign currency forward contracts and settled $26.1 million of such contracts. During the fiscal year ended June 27, 2020, the Company entered into $23.8 million of foreign currency forward contracts and settled $26.7 million of such contracts.

On November 6, 2019, the Company entered into an interest rate swap contract with an effective date of November 6, 2019 and a termination date of September 30, 2022, related to the borrowings outstanding under the term loan with Wells Fargo Bank. This interest rate swap contract was terminated on August 14, 2020 when the Company entered into a loan and security agreement with Bank of America. At date of termination this interest rate swap was in a liability position of $148,400, which will be amortized to interest expense over the original term of the swap.

On November 6, 2019, the Company entered into an interest rate swap contract with an effective date of November 6, 2019 and a termination date of November 1, 2023, related to the borrowings outstanding under the line of credit with Wells Fargo Bank. This interest rate swap contract was terminated on August 14, 2020 when the Company entered into a loan and security agreement with Bank of America. At date of termination this interest rate swap was in a liability position of $776,500, which will be amortized to interest expense over the original term of the swap.

The following table summarizes the fair value of derivative instruments in the Consolidated Balance Sheets as of July 2, 2022 and July 3, 2021 (in thousands):

		July 2, 2022		July 3, 2021
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Fair Value		Fair Value
Foreign currency forward contracts & swaps	Other current assets	$	—	$	3,614

The following table summarizes the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the fiscal year 2022 (in thousands):

Derivatives Designated as Hedging Instruments	Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	AOCI Balance as of July 3, 2021		Effective Portion Recorded In AOCI		Effective Portion Reclassified From AOCI Into Income		AOCI Balance as of July 2, 2022
Forward contracts	Cost of sales	$	2,721	$	950	$	(3,750)	$	(79)
Interest rate swap	Interest expense	(649)		—		303		(346)
Total		$	2,072	$	950	$	(3,447)	$	(425)

The following table summarizes the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the fiscal year 2021 (in thousands):

Derivatives Designated as Hedging Instruments	Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	AOCI Balance as of June 27, 2020		Effective Portion Recorded In AOCI		Effective Portion Reclassified From AOCI Into Income		AOCI Balance as of July 3, 2021
Forward contracts	Cost of sales	$	(759)	$	4,621	$	(1,141)	$	2,721
Interest rate swap	Interest expense	(741)		(223)		315		(649)
Total		$	(1,500)	$	4,398	$	(826)	$	2,072

The following table summarizes the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the fiscal year 2020 (in thousands):

Derivatives Designated as Hedging Instruments	Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	AOCI Balance as of June 29, 2019		Effective Portion Recorded In AOCI		Effective Portion Reclassified From AOCI Into Income		AOCI Balance as of June 27, 2020
Forward contracts & swaps	Cost of sales	$	2,424	$	(865)	$	(2,318)	$	(759)
Interest rate swap	Interest expense	2		(782)		39		(741)
Total		$	2,426	$	(1,647)	$	(2,279)	$	(1,500)

As of July 2, 2022, the Company does not have any foreign exchange contracts with credit-risk-related contingent features. The Company is subject to the risk of fluctuating interest rates from our line of credit and foreign currency risk resulting from our China operations. The Company does not currently manage these risk exposures by using derivative instruments.