DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Jun. 27, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

As of June 27, 2015, the Company had outstanding foreign currency forward contracts of $65.0 million. These contract maturity dates extend through June 2018. As of June 27, 2015, the net amount of unrealized loss expected to be reclassified into earnings within the next 12 months is approximately $1.8 million. During the fiscal year ended June 27, 2015, the Company entered into $23.1 million of foreign currency forward contracts and settled $20.5 million of such contracts. During the fiscal year ended June 28, 2014, the Company entered into $15.2 million of foreign currency forward contracts and settled $22.5 million of such contracts. During the fiscal year ended June 29, 2013, the Company entered into $34.7 million of foreign currency forward contracts and settled $22.7 million of such contracts.

Subsequent to June 27, 2015, the Company entered into $5.3 million of additional foreign currency forward contracts that extended our hedge position through September 2018.

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 and line of credit. 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 debt facilities. 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 Sheets as of June 27, 2015 and June 28, 2014 (in thousands):

		June 27, 2015			June 28, 2014
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Fair Value			Fair Value
Foreign currency forward contracts	Other current assets	$	—		$	2,034
Foreign currency forward contracts	Other long-term assets	$	—		$	1,607
Foreign currency forward contracts	Other current liabilities	$	(2,517	)	$	—
Foreign currency forward contracts	Other long-term liabilities	$	(4,282	)	$	—
Interest rate swaps	Other long-term assets	$	25		$	—
Interest rate swaps	Other current liabilities	$	(271	)	$	—
Interest rate swaps	Other long-term liabilities	$	(172	)	$	—

The following table summarizes the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the fiscal year 2015 (in thousands):

Derivatives Designated as Hedging Instruments	AOCI Balance as of June 28, 2014		Effective Portion Recorded In AOCI			Effective Portion Reclassified From AOCI Into Cost of Sales		AOCI Balance as of June 27, 2015
Settled foreign currency forward contracts	$	1,343	$	(1,661	)	$	318	$	—
Unsettled foreign currency forward contracts	1,060		(5,547		)	—		(4,487		)
Unsettled interest rate swaps	—		(276		)	—		(276		)
Total	$	2,403	$	(7,484	)	$	318	$	(4,763	)

The following table summarizes the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the fiscal year 2014 (in thousands):

Derivatives Designated as Hedging Instruments	AOCI Balance as of June 29, 2013		Effective Portion Recorded In AOCI		Effective Portion Reclassified From AOCI Into Cost of Sales			AOCI Balance as of June 28, 2014
Settled foreign currency forward contracts	$	404	$	421	$	(825	)	$	—
Unsettled foreign currency forward contracts	909		1,494		—			2,403
Total	$	1,313	$	1,915	$	(825	)	$	2,403

The following table summarizes the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the fiscal year 2013 (in thousands):

Derivatives Designated as Hedging Instruments	AOCI Balance as of June 30, 2012			Effective Portion Recorded In AOCI		Effective Portion Reclassified From AOCI Into Cost of Sales			AOCI Balance as of June 29, 2013
Settled foreign currency forward contracts	$	(479	)	$	1,060	$	(581	)	$	—
Unsettled foreign currency forward contracts	(180		)	1,493		—			1,313
Total	$	(659	)	$	2,553	$	(581	)	$	1,313

As of June 27, 2015, 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.