XML 73 R16.htm IDEA: XBRL DOCUMENT v3.3.0.814
Note 10 - Derivative Financial Instruments
 3 Months Ended
Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

10)      Derivative Financial Instruments


Interest Rate Swaps


From time to time as dictated by market opportunities, the Company enters into interest rate swap agreements designed to manage exposure to interest rates on the Company’s variable rate indebtedness. The Company recognizes all derivatives on its balance sheet at fair value. The Company has designated its interest rate swap agreements, including those that are forward-dated, as cash flow hedges, and changes in the fair value of the swaps are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps will be reported by the Company in interest expense.


The Company’s effective swap agreements convert the base borrowing rate on $35 million of debt due under our revolving credit agreement from a variable rate equal to LIBOR to a weighted average fixed rate of 1.63% at September 30, 2015. The fair value of the swaps recognized in accrued expenses and in other comprehensive income is as follows (in thousands, except percentages):


                      Fair Value  
Effective Date   Notional Amount     Fixed Rate   Maturity  

September 30,

2015

    

June 30,

2015

  

March 15, 2012

     10,000       2.745 %

March 15, 2016

   $ (126 )   $ (186 )

December 19, 2014

     20,000       1.180 %

December 19, 2017

     (226 )     (140 )

December 19, 2014

     5,000       1.200 %

December 19, 2017

     (57 )     (36 )

December 19, 2015

     10,000       2.005 %

December 19, 2019

     (338 )     (150 )

December 18, 2015

     15,000       1.460 %

December 19, 2018

     (227 )     (39 )
                      $ (974 )   $ (551 )

The Company reported no losses for the three months ended September 30, 2015, as a result of hedge ineffectiveness. Future changes in these swap arrangements, including termination of the agreements, may result in a reclassification of any gain or loss reported in accumulated other comprehensive income (loss) into earnings as an adjustment to interest expense. Accumulated other comprehensive income (loss) related to these instruments is being amortized into interest expense concurrent with the hedged exposure.


Foreign Exchange Contracts


Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such as foreign sales, foreign purchases of materials, and loan payments to and from subsidiaries. The Company enters into such contracts for hedging purposes only. For hedges of intercompany loan payments, the Company has not elected hedge accounting due to the general short-term nature and predictability of the transactions, and records derivative gains and losses directly to the statement of operations. At September 30, 2015 and June 30, 2015, the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealized gain (losses) of $0.1 million and $0.7 million, respectively, which approximate the unrealized gains and losses on the related loans. The notional amounts of the Company’s forward contracts, by currency, are as follows:


   

Notional Amount

  
   

(in native currency)

  

Currency

  

September 30, 2015

    

June 30, 2015

  

Euro

     4,270,320       10,134,797  

British Pound Sterling

     120,491       1,730,542  

The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet (in thousands):


 

Asset Derivatives

  
 

September 30, 2015

  

June 30, 2015

  

Derivative designated as

Balance

        

Balance

        

hedging instruments

Sheet

        

Sheet

        
 

Line Item

  

Fair Value

  

Line Item

  

Fair Value

  

Foreign exchange contracts

Other Assets

   $ 200  

Other Assets

   $ 844  

 

Liability Derivatives

  
 

September 30, 2015

  

June 30, 2015

  

Derivative designated as

Balance

        

Balance

        

hedging instruments

Sheet

        

Sheet

        
 

Line Item

  

Fair Value

  

Line Item

  

Fair Value

  

Interest rate swaps

Accrued Liabilities

   $ 974  

Accrued Liabilities

   $ 551  

Foreign exchange contracts

Accrued Liabilities

     80  

Accrued Liabilities

     193  
      $ 1,054       $ 744  

The table below presents the amount of gain (loss) recognized in comprehensive income on our derivative financial instruments (effective portion) designated as hedging instruments and their classification within comprehensive income for the periods ended (in thousands):


   

Three Months Ended

  
   

September 30,

  
   

2015

    

2014

  

Interest rate swaps

   $ (552 )   $ (2 )

Foreign exchange contracts

     74       -  
    $ (478 )   $ (2 )

The table below presents the amount reclassified from accumulated other comprehensive income (loss) to Net Income for the periods ended (in thousands):


Details about Accumulated

                 

Other Comprehensive

  

Three Months Ended

  

Affected line item

Income (Loss) Components

  

September 30,

  

in the Statements
   

2015

    

2014

  

of Operations

Interest rate swaps

   $ 128     $ 258  

Interest expense

Foreign exchange contracts

     (8 )     -  

Cost of Sales
    $ 120     $ 258