Derivative Instruments

9 Months Ended

Mar. 27, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

We own and operate manufacturing operations in Mexico.  As a result, a portion of our manufacturing costs are incurred in Mexican pesos, which causes our earnings and cash flows to fluctuate due to changes in the U.S. dollar/Mexican peso exchange rate.  As of March 27, 2016, we have executed contracts with Bank of Montreal that provide for bi-weekly and monthly Mexican peso currency forward contracts for a portion of our estimated peso denominated operating costs. The current peso currency forward contracts include settlement dates that began on October 16, 2015 and end on June 15, 2017. No forward contracts were in place during fiscal 2015 or outstanding as of June 28, 2015. Our objective in entering into these currency forward contracts is to minimize our earnings volatility resulting from changes in exchange rates affecting the U.S. dollar cost of our Mexican operations. The Mexican peso forward contracts are not used for speculative purposes and are not designated as hedges.  As a result, all currency forward contracts are recognized in our accompanying condensed consolidated financial statements at fair value and changes in the fair value are reported in current earnings as part of Other Income, net.

The following table quantifies the outstanding Mexican peso forward contracts as of March 27, 2016 (thousands of dollars, except average forward contractual exchange rates):

	Effective Dates	Notional Amount		Average Forward Contractual Exchange Rate		Fair Value
Buy MXP/Sell USD	January 5, 2016 - June 21, 2016	$	4,500		16.00	$	(436	)
Buy MXP/Sell USD	July 15, 2016 - June 15, 2017	$	24,000		17.95	$	(164	)

The fair market value of all outstanding Mexican peso forward contracts in the accompanying Condensed Consolidated Balance Sheets was as follows (thousands of dollars):

	March 27, 2016		June 28, 2015
Not Designated as Hedging Instruments:
Other Current Liabilities:
Mexican Peso Forward Contracts	$	600	$	—

The pre-tax effects of the Mexican peso forward contracts are included in Other Income, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income and consisted of the following (thousands of dollars):

	Three Months Ended					Nine Months Ended
	March 27, 2016			March 29, 2015		March 27, 2016			March 29, 2015
Not Designated as Hedging Instruments:
Realized Loss	$	(526	)	$	—	$	(704	)	$	—
Unrealized Gain (Loss)	$	267		$	—	$	(600	)	$	—