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DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended
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Jun. 27, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS As of June 27, 2020, the Company had outstanding foreign currency forward contracts and swaps with a total notional amount of $36.7 million. The maturity dates for these contracts and swaps extend through December 2021. As of June 27, 2020, 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, 2020, the Company entered into $23.8 million of foreign currency forward contracts and settled $26.7 million of such contracts. During the fiscal year ended June 29, 2019, the Company entered into $19.2 million of foreign currency forward contracts and settled $25.9 million of such contracts. During the fiscal year ended June 30, 2018, the Company entered into $13.7 million of foreign currency forward contracts and settled $28.1 million of such contracts. As of June 27, 2020, the aggregate notional amount of the Company’s outstanding foreign currency contracts and swaps along with their unrealized gains (losses) are expected to mature as summarized below (in thousands):
Quarter Ending |  | Notional Contracts and Swaps in MXN |  | Notional Contracts and Swaps in USD |  | Estimated Fair Value
September 26, 2020 |  | $ | 141,173 |  |  | $ | 6,729 |  |  | $ | (623) |
December 26, 2020 |  | $ | 132,773 |  |  | $ | 6,241 |  |  | $ | (561) |
April 3, 2021 |  | $ | 148,253 |  |  | $ | 6,682 |  |  | $ | (425) |
July 3, 2021 |  | $ | 144,725 |  |  | $ | 6,446 |  |  | $ | (367) |
October 2, 2021 |  | $ | 146,373 |  |  | $ | 5,502 |  |  | $ | 564 |
January 1, 2022 |  | $ | 137,973 |  |  | $ | 5,129 |  |  | $ | 532 |
On November 6, 2019, the Company entered into an interest rate swap contract with an effective date of November 6, 2019 and a termination date of September 30, 2022, with a notional amount of $15.0 million related to the borrowings outstanding under the term loan. 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 1.70% that replaces 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. As of June 27, 2020, the remaining notional balance of this swap was $11.7 million. On November 6, 2019, the Company entered into an interest rate swap contract with an effective date of November 6, 2019 and a termination date of November 1, 2023, with a notional amount of $15.0 million related to the borrowings outstanding under the 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 1.67% that replaces the one month LIBOR rate component of our contractual interest to be paid to WFB as part of our line of credit. Based on the terms of the interest rate swap contract and the underlying borrowings outstanding under the line of credit, the interest rate contract was determined to be effective, and thus qualified as a cash flow hedge. In conjunction with the new credit facility, the interest rate swap contracts have been terminated. Please refer to footnote 17 Subsequent Event for more information. The following table summarizes the fair value of derivative instruments in the Consolidated Balance Sheets as of June 27, 2020 and June 29, 2019 (in thousands):
|  |  |  | June 27, 2020 |  | June 29, 2019
Derivatives Designated as Hedging Instruments |  | Balance Sheet Location |  | Fair Value |  | Fair Value
Foreign currency forward contracts & swaps |  | Other current assets |  | $ | — |  |  | $ | 2,912 |
Foreign currency forward contracts & swaps |  | Other long-term assets |  | $ | 1,097 |  |  | $ | 320 |
Foreign currency forward contracts & swaps |  | Other current liabilities |  | $ | (1,960) |  |  | $ | — |
Foreign currency forward contracts & swaps |  | Other long-term liabilities |  | $ | (17) |  |  | $ | — |
Interest rate swaps |  | Other current assets |  | $ | — |  |  | $ | 2 |
Interest rate swaps |  | Other current liabilities |  | $ | (347) |  |  | $ | — |
Interest rate swaps |  | Other long-term liabilities |  | $ | (610) |  |  | $ | — |
The following table summarizes the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the fiscal year 2020 (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 June 27, 2020
Forward contracts & swaps | Cost of sales |  | $ | 2,424 |  |  | $ | (865) |  |  | $ | (2,318) |  |  | $ | (759) |
Interest rate swap | Interest expense |  | 2 |  |  | (782) |  |  | 39 |  |  | (741) |
Total |  |  | $ | 2,426 |  |  | $ | (1,647) |  |  | $ | (2,279) |  |  | $ | (1,500) |
The following table summarizes the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the fiscal year 2019 (in thousands):
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 |  | Effective Portion Reclassified From AOCI Into Income |  | AOCI Balance as of June 29, 2019
Forward contracts & swaps | Cost of sales |  | $ | (988) |  |  | $ | 3,332 |  |  | $ | 80 |  |  | $ | 2,424 |
Interest rate swap | Interest expense |  | 19 |  |  | 2 |  |  | (19) |  |  | 2 |
Total |  |  | $ | (969) |  |  | $ | 3,334 |  |  | $ | 61 |  |  | $ | 2,426 |
The following table summarizes the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the fiscal year 2018 (in thousands):
Derivatives Designated as Hedging Instruments | Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |  | AOCI Balance as of July 1, 2017 |  | Effective Portion Recorded In AOCI |  | Tax Rate Effect Reclassification |  | Effective Portion Reclassified From AOCI Into Income |  | AOCI Balance as of June 30, 2018
Forward contracts & swaps | Cost of sales |  | $ | (2,707) |  |  | $ | (1,942) |  |  | $ | (583) |  |  | $ | 4,244 |  |  | $ | (988) |
Interest rate swap | Interest expense |  | (68) |  |  | 20 |  |  | (3) |  |  | 70 |  |  | 19 |
Total |  |  | $ | (2,775) |  |  | $ | (1,922) |  |  | $ | (586) |  |  | $ | 4,314 |  |  | $ | (969) |
As of June 27, 2020, 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.

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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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