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DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended
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Jun. 30, 2012
DERIVATIVE FINANCIAL INSTRUMENTS | 10. DERIVATIVE FINANCIAL INSTRUMENTS The Company has entered into foreign currency forward contracts and those contracts are accounted for as cash flow hedges. The effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (AOCI) and is reclassified into earnings in the same period in which the underlying hedged transaction affects earnings. The derivative’s effectiveness represents the change in fair value of the hedge that offsets the change in fair value of the hedged item. The Company transacts business in Mexico and is subject to the risk of foreign currency exchange rate fluctuations. The Company enters into foreign currency forward contracts to manage the foreign currency fluctuations for Mexican peso denominated payroll, utility, tax, and accounts payable expenses. The foreign currency forward contracts have terms that are matched to the underlying transactions being hedged. As a result, these transactions fully offset the hedged risk and no ineffectiveness has been recorded. As of June 30, 2012, the Company had outstanding foreign currency forward contracts of $57.8 million. These contract maturity dates extend through March 2015. As of June 30, 2012, the net amount of existing losses expected to be reclassified into earnings within the next 12 months is $0.3 million. During the fiscal year ended June 30, 2012, the Company entered into $41.1 million of foreign currency forward contracts, which includes $5.6 million of foreign cross currency swaps which are also accounted for as cash flow hedges in accordance with ASC 815, Derivatives and Hedging, and settled $21.2 million of such contracts. During the fiscal year ended July 2, 2011, the Company entered into $21.7 million of foreign currency forward contracts and settled $14.6 million of such contracts. During the fiscal year ended July 3, 2010, the Company entered into $30.9 million of foreign currency forward contracts and settled $17.8 million of such contracts. The following table summarizes the fair value of derivative instruments in the Consolidated Balance Sheets as of June 30, 2012 and July 2, 2011 (in thousands):
Derivatives Designated as Hedging Instruments |  | Balance Sheet Location |  | June 30, 2012 Fair Value |  |  | July 2, 2011 Fair Value |
Foreign currency forward contracts |  | Other current assets |  | $ | 199 |  |  | $ | 1,645 |
Foreign currency forward contracts |  | Other long term assets |  | $ | 659 |  |  | $ | 1,078 |
Foreign currency forward contracts |  | Other current liabilities |  | $ | (923 | ) |  | $ | — |
Foreign currency forward contracts |  | Other long term liabilities |  | $ | (928 | ) |  | $ | (82 | )
The following table summarizes the gain (loss) of derivative instruments on the Consolidated Statement of Operations for the fiscal year 2012 (in thousands):
Derivatives Designated as Hedging Instruments |  | AOCI Balance as of July 2, 2011 |  |  | Effective Portion Recorded In AOCI |  |  | Effective Portion Reclassified From AOCI Into Cost of Sales |  |  | AOCI Balance as of June 30, 2012 |
Settled foreign currency forward contracts |  | $ | 1,035 |  |  | $ | (1,119 | ) |  | $ | 84 |  |  | $ | — |
Unsettled foreign currency forward contracts |  |  | 705 |  |  |  | (1,364 | ) |  |  | — |  |  |  | (659 | )
Total |  | $ | 1,740 |  |  | $ | (2,483 | ) |  | $ | 84 |  |  | $ | (659 | )
The following table summarizes the gain (loss) of derivative instruments on the Consolidated Statement of Operations for the fiscal year 2011 (in thousands):
Derivatives Designated as Hedging Instruments |  | AOCI Balance as of July 3, 2010 |  |  | Effective Portion Recorded In AOCI |  |  | Effective Portion Reclassified From AOCI Into Cost of Sales |  |  | AOCI Balance as of July 2, 2011 |
Settled foreign currency forward contracts |  | $ | 279 |  |  | $ | 1,253 |  |  | $ | (1,532 | ) |  | $ | — |
Unsettled foreign currency forward contracts |  |  | (521 | ) |  |  | 2,261 |  |  |  | — |  |  |  | 1,740 |
Total |  | $ | (242 | ) |  | $ | 3,514 |  |  | $ | (1,532 | ) |  | $ | 1,740 |
The following table summarizes the gain (loss) of derivative instruments on the Consolidated Statement of Operations for the fiscal year 2010 (in thousands):
Derivatives Designated as Hedging Instruments |  | AOCI Balance as of June 27, 2009 |  |  | Effective Portion Recorded In AOCI |  |  | Effective Portion Reclassified From AOCI Into Cost of Sales |  |  | AOCI Balance as of July 3, 2010 |
Settled foreign currency forward contracts |  | $ | 912 |  |  | $ | 912 |  |  | $ | (1,824 | ) |  | $ | — |
Unsettled foreign currency forward contracts |  |  | — |  |  |  | (242 | ) |  |  | — |  |  |  | (242 | )
Total |  | $ | 912 |  |  | $ | 670 |  |  | $ | (1,824 | ) |  | $ | (242 | )
The Company does not enter into derivative instruments for trading or speculative purposes. The Company’s counterparties to the foreign currency forward contracts are major banking institutions. These institutions do not require collateral for the contracts, and the Company believes that the risk of the counterparties failing to meet their contractual obligations is remote. As of June 30, 2012, 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 its China operations. The Company does not currently manage these risk exposures by using derivative instruments.

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- Definition The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80784-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624171-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624181-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708775-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579245-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41641-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579240-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41635-113959 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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