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Note 10 - Derivative Financial Instruments
 6 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
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
$50
million of debt due under our revolving credit agreement from a variable rate equal to LIBOR to a weighted average fixed rate of
1.43%
at
December
31,
2016.
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
 
December 31,
2016
 
 
 
June 30,
2016
 
December 19, 2014
    
20,000
     
1.18%
  
December 19, 2017
   $
(47
 )   $
(201
 )
December 19, 2014
    
5,000
     
1.20%
  
December 19, 2017
    
(13
 )    
(52
 )
December 18, 2015
    
15,000
     
1.46%
  
December 19, 2018
    
(68
 )    
(325
 )
December 19, 2015
    
10,000
     
2.01%
  
December 19, 2019
    
(158
 )    
(460
 )
     
 
      
 
  
 
   $
(286
 )   $
(1,038
 )
 
The Company reported
no
losses for the
three
and
six
months ended
December
31,
2016,
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 Unaudited Condensed Consolidated Statements of Operations. At
December
31,
2016
and
June
30,
2016,
the Company had outstanding forward contracts related to hedges of intercompany loans with both net unrealized gain (losses) of
$
(0.1)
million, 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
 
December 31, 2016
 
 
June 30, 2016
 
Euro
    
199,904
     
2,476,683
 
British Pound Sterling
    
247,852
     
593,799
 
 
The table below presents the fair value of derivative financial instruments as well as their classification on the Unaudited Condensed Consolidated Balance Sheets (in thousands):
 
 
Asset Derivatives
 
 
December 31, 2016
 
June 30, 2016
 
Derivative designated
Balance
 
 
 
 
Balance
 
 
 
 
as hedging instruments
Sheet
 
 
 
 
Sheet
 
 
 
 
 
Line Item
 
Fair Value
 
Line Item
 
Fair Value
 
Foreign exchange contracts
Other Assets
   $
1
 
Other Assets
   $
11
  
 
 
Liability Derivatives
 
 
December 31, 2016
 
June 30, 2016
 
Derivative designated
Balance
 
 
 
 
Balance
 
 
 
 
as hedging instruments
Sheet
 
 
 
 
Sheet
 
 
 
 
 
Line Item
 
Fair Value
 
Line Item
 
Fair Value
 
Interest rate swaps
Accrued Liabilities
   $
286
 
Accrued Liabilities
   $
1,038
 
Foreign exchange contracts
Accrued Liabilities
    
70
 
Accrued Liabilities
    
94
 
 
 
   $
356
  
 
   $
1,132
  
 
 
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
 
 
Six Months Ended
 
 
 
December 31,
 
 
December 31,
 
 
 
2016
 
 
2015
 
 
2016
 
 
2015
 
Interest rate swaps
   $
465
     $
307
     $
628
     $
(245
 )
Foreign exchange contracts
    
28
      
127
      
(74
 )    
201
  
    $
493
     $
434
     $
554
     $
(44
 )
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
Affected line item
Other Comprehensive
 
Three Months Ended
 
 
Six Months Ended
 
in the
Unaudited
Income (Loss) Components
 
December 31,
 
 
December 31,
 
Condensed
Statements
 
 
2016
 
 
2015
 
 
2016
 
 
2015
 
of Operations
Interest rate swaps
   $
110
    $
138
    $
229
    $
266
 
Interest expense
Foreign exchange contracts
    
(27
 )    
(31
 )    
75
      
(39
 )
Cost of Sales
    $
83
     $
107
     $
304
     $
227