Derivative Instruments & Hedging Activities

12 Months Ended

Jul. 03, 2016

Foreign Currency Derivatives [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Instruments & Hedging Activities:

The Company enters into interest rate swaps to manage a portion of its interest rate risk from financing certain dealer and distributor inventories through a third party financing source. The swaps are designated as cash flow hedges and are used to effectively fix the interest payments to a third party financing source, exclusive of lender spreads, ranging from 0.98% to 1.60% for a notional principal amount of $145 million with expiration dates ranging from July 2017 to July 2021.

The Company periodically enters into forward foreign currency contracts to hedge the risk from forecasted third party and intercompany sales or payments denominated in foreign currencies. These obligations generally require the Company to exchange foreign currencies for U.S. Dollars, Australian Dollars, Brazilian Real, Canadian Dollars. Chinese Renminbi, Euros, Japanese Yen, or Mexican Pesos. These contracts generally do not have a maturity of more than twenty-four months.

The Company uses raw materials that are subject to price volatility. The Company hedges a portion of its exposure to the variability of cash flows associated with commodities used in the manufacturing process by entering into forward purchase contracts or commodity swaps. Derivative contracts designated as cash flow hedges are used by the Company to reduce exposure to variability in cash flows associated with future purchases of natural gas. These contracts generally do not have a maturity of more than thirty six months.

The Company has considered the counterparty credit risk related to all its interest rate, foreign currency, and commodity derivative contracts and does not deem any counterparty credit risk material at this time.

The notional amount of derivative contracts outstanding at the end of the period is indicative of the level of the Company’s derivative activity during the period. As of July 3, 2016 and June 28, 2015, the Company had the following outstanding derivative contracts (in thousands):

Contract		Notional Amount
		July 3, 2016	June 28, 2015
Interest Rate:
LIBOR Interest Rate (U.S. Dollars)	Fixed	145,000	95,000
Foreign Currency:
Australian Dollar	Sell	39,935	29,473
Brazilian Real	Buy	16,436	22,443
Canadian Dollar	Sell	8,675	9,326
Chinese Renminbi	Buy	171,475	259,350
Euro	Sell	41,730	62,740
Japanese Yen	Buy	587,000	711,000
Mexican Peso	Sell	3,500	—
Commodity:
Natural Gas (Therms)	Buy	11,771	11,324

The location and fair value of derivative instruments reported in the Consolidated Balance Sheets are as follows (in thousands):

Balance Sheet Location	Asset (Liability) Fair Value
	July 3, 2016			June 28, 2015
Interest rate contracts:
Other Long-Term Liabilities	$	(1,367	)	$	(1,034	)
Foreign currency contracts:
Other Current Assets	1,356			4,417
Other Long-Term Assets, Net	2			276
Accrued Liabilities	(2,601		)	(1,041		)
Other Long-Term Liabilities	(185		)	(43		)
Commodity contracts:
Other Long-Term Assets, Net	64			—
Accrued Liabilities	(190		)	(493		)
Other Long-Term Liabilities	(16		)	(134		)
	$	(2,937	)	$	1,948

The effect of derivatives designated as hedging instruments on the Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows (in thousands):

	Twelve months ended July 3, 2016
	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on  Derivatives, Net of Taxes (Effective Portion)			Classification of Gain (Loss)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Recognized in Earnings (Ineffective  Portion)
Interest rate contracts	$	(213	)	Net Sales	$	(1,113	)	$	—
Foreign currency contracts – sell	(2,187		)	Net Sales	5,554			—
Foreign currency contracts – buy	(664		)	Cost of Goods Sold	2,030			—
Commodity contracts	300			Cost of Goods Sold	(901		)	—
	$	(2,764	)		$	5,570		$	—

	Twelve months ended June 28, 2015
	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on  Derivatives, Net of Taxes (Effective Portion)			Classification of Gain (Loss)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Recognized in Earnings (Ineffective  Portion)
Interest rate contracts	$	79		Net Sales	$	(1,222	)	$	—
Foreign currency contracts – sell	2,086			Net Sales	12,353			—
Foreign currency contracts – buy	228			Cost of Goods Sold	(1,003		)	—
Commodity contracts	(97		)	Cost of Goods Sold	(521		)	—
	$	2,296			$	9,607		$	—

	Twelve months ended June 29, 2014
	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on  Derivatives, Net of Taxes (Effective Portion)			Classification of Gain (Loss)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Recognized in Earnings (Ineffective  Portion)
Interest rate contracts	$	(254	)	Net Sales	$	(1,209	)	$	—
Foreign currency contracts – sell	(717		)	Net Sales	(1,024		)	—
Foreign currency contracts – buy	182			Cost of Goods Sold	(1,109		)	—
Commodity contracts	3,378			Cost of Goods Sold	(5,630		)	—
	$	2,589			$	(8,972	)	$	—

During the next twelve months, the amount of the July 3, 2016 Accumulated Other Comprehensive Income (Loss) balance that is expected to be reclassified into losses is $1.0 million.

The Company enters into forward exchange contracts to hedge purchases and sales that are denominated in foreign currencies. The terms of these currency derivatives do not exceed twenty-four months, and the purpose is to protect the Company from the risk that the eventual dollars being transferred will be adversely affected by changes in exchange rates.

The Company has forward foreign exchange contracts to sell foreign currency, with the Euro as the most significant. These contracts are used to hedge foreign currency collections on sales of inventory. The Company also has forward contracts to purchase foreign currencies. The Company’s foreign currency forward contracts are carried at fair value based on current exchange rates.

The Company had the following forward currency contracts outstanding at the end of fiscal 2016 with the notional value shown in local currency and the contract value, fair value, and (gain) loss at fair value shown in U.S. dollars:

Hedge		In Thousands
		Notional Value	Contract Value	Fair Value	(Gain) Loss at Fair Value		Conversion Currency	Latest Expiration Date
Currency	Contract
Australian Dollar	Sell	39,935	28,937	29,772	835		U.S.	August 2017
Brazilian Real	Buy	16,436	6,391	5,335	1,056		U.S.	March 2017
Canadian Dollar	Sell	8,675	6,660	6,720	60		U.S.	August 2017
Chinese Renminbi	Buy	171,475	25,874	25,402	472		U.S.	September 2017
Euro	Sell	41,730	47,145	46,906	(239	)	U.S.	November 2017
Japanese Yen	Buy	587,000	4,998	5,749	(751	)	U.S.	January 2017
Mexican Peso	Sell	3,500	195	190	(5	)	U.S.	August 2016

The Company had the following forward currency contracts outstanding at the end of fiscal 2015 with the notional value shown in local currency and the contract value, fair value, and (gain) loss at fair value shown in U.S. dollars:

Hedge		In Thousands
		Notional Value	Contract Value	Fair Value	(Gain) Loss at Fair Value		Conversion Currency	Latest Expiration Date
Currency	Contract
Australian Dollar	Sell	29,473	22,966	22,329	(637	)	U.S.	August 2016
Brazilian Real	Buy	22,443	7,280	7,470	(190	)	U.S.	February 2016
Canadian Dollar	Sell	9,326	7,599	7,558	(41	)	U.S.	February 2016
Chinese Renminbi	Buy	259,350	40,523	41,127	(604	)	U.S.	November 2016
Euro	Sell	62,740	72,697	70,338	(2,359	)	U.S.	September 2016
Japanese Yen	Buy	711,000	5,984	5,762	222		U.S.	August 2016

The Company continuously evaluates the effectiveness of its hedging program by evaluating its foreign exchange contracts compared to the anticipated underlying transactions. The Company did not have any ineffective currency hedges in fiscal 2016, 2015, or 2014.