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Derivative Instruments | 3 Months Ended
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Sep. 27, 2020
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. We have contracts with Bank of Montreal that provide for monthly Mexican peso currency forward contracts for a portion of our estimated peso denominated operating costs. Our objective in entering into 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 Expense, net. The following table quantifies the outstanding Mexican peso forward contracts as of September 27, 2020 (thousands of dollars, except with respect to the average forward contractual exchange rate):
|  | Effective Dates |  | Notional Amount |  |  | Average Forward Contractual Exchange Rate |  |  | Fair Value |
Buy MXP/Sell USD |  | October 14, 2020 - December 16, 2020 |  | $ | 3,000 |  |  |  | 21.40 |  |  | $ | (146 | )
The fair market value of all outstanding Mexican peso forward contracts in the accompanying Condensed Consolidated Balance Sheets as of the dates specified was as follows (thousands of dollars):
|  | September 27, 2020 |  |  | June 28, 2020 |
Not Designated as Hedging Instruments: |  |  |  |  |  |  |  |
Other Current Liabilities: |  |  |  |  |  |  |  |
Mexican Peso Forward Contracts |  | $ | 146 |  |  | $ | 480 |
The pre-tax effects of the Mexican peso forward contracts are included in Other Expense, net on the accompanying Condensed Consolidated Statements of Income and Comprehensive Income and consisted of the following for the periods indicated below (thousands of dollars):
|  | Three Months Ended |
|  | September 27, 2020 |  |  | September 29, 2019 |
Not Designated as Hedging Instruments: |  |  |  |  |  |  |  |
Realized Loss |  | $ | (59 | ) |  | $ | — |
Unrealized Gain |  | $ | 335 |  |  | $ | — |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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