DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Sep. 28, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

As of September 28, 2019, the Company had outstanding foreign currency forward contracts with a total notional amount of $33.0 million. The maturity dates for these contracts extend through December 2020. For the three months ended September 28, 2019, the Company did not enter into any foreign currency forward contracts and settled $6.7 million of such contracts. During the same period of the previous year, the Company did not enter into any foreign currency forward contracts and settled $5.3 million of such contracts.

As of September 28, 2019, the aggregate notional amount of the Company’s outstanding foreign currency contracts along with their unrealized gains are expected to mature as summarized below (in thousands):



Quarter Ending	Notional Contracts in MXN		Notional Contracts in USD		Estimated Fair Value
December 28, 2019	$	152,613	$	7,187	$	508
March 28, 2020	$	146,613	$	6,553	$	736
June 27, 2020	$	138,213	$	6,257	$	525
September 26, 2020	$	141,173	$	6,729	$	117
December 26, 2020	$	132,773	$	6,241	$	125

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, related to the borrowings outstanding under the term loan. This interest rate swap paid 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 was 1.97% that replaced 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 qualified as a cash flow hedge.

The following table summarizes the fair value of derivative instruments in the Consolidated Balance Sheet as of September 28, 2019 and June 29, 2019 (in thousands):



		September 28, 2019		June 29, 2019
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Fair Value		Fair Value
Foreign currency forward contracts & swaps	Other current assets	$	1,886	$	2,912
Foreign currency forward contracts & swaps	Other long-term assets	$	125	$	320
Interest rate swap	Other current assets	$	—	$	2

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the three months ended September 28, 2019 and September 29, 2018, respectively (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 September 28, 2019
Forward contracts & swaps	Cost of sales	$	2,424		$	(41	)	$	(904	)	$	1,479
Interest rate swap	Interest expense	2			—			(2		)	—
Total		$	2,426		$	(41	)	$	(906	)	$	1,479

Derivatives Designated as Hedging Instruments	Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	AOCI Balance as of June 30, 2018			Effective Portion Recorded In AOCI ⁽¹⁾			Effective Portion Reclassified From AOCI Into Income			AOCI Balance as of September 29, 2018
Forward contracts & swaps	Cost of sales	$	(988	)	$	2,515		$	534		$	2,061
Interest rate swap	Interest expense	19			2			(2		)	19
Total		$	(969	)	$	2,517		$	532		$	2,080

As of September 28, 2019, the net amount of unrealized gain expected to be reclassified into earnings within the next 12 months is approximately $1.5 million. As of September 28, 2019, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.