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Note 11 - Derivative Financial Instruments | 6 Months Ended
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Dec. 31, 2018
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | 11 ) Derivative Financial Instruments In August 2017, the FASB issued ASU 2017 - 12, Derivatives and Hedging (Topic 815 ); Targeting Improvements to Accounting for Hedging Activities , which improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and to make certain targeted improvements to simplify the application of hedge accounting guidance. Given the improvements made to the application of hedge accounting under the guidance, the Company has decided to early adopt the ASU in the second quarter of fiscal 2019, or on December 1, 2018. As of the adoption date, the Company had both foreign currency swaps and interest rate swaps which are designated and accounted for as cash flow hedges with no hedge ineffectiveness historically recorded. As the Company had historically determined its foreign currency exchange contracts and interest rate swaps to be perfectly effective it did not record any hedge ineffectiveness in earnings related to the swaps historically or on the initial application date. Therefore, there is no cumulative-effect adjustment necessary to apply this change in accounting principle. In addition to the above, the Company reviewed the ASU and identified no other provisions of the standard which would result in a quantitative impact as a result of applying the new guidance. 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 $85 million of debt due under our revolving credit agreement from a variable rate equal to LIBOR to a weighted average fixed rate of 2.11% at December 31, 2018. The fair value of the swaps, recognized in accrued expenses and in other comprehensive income, is as follows (in thousands, except percentages):
Effective Date |  | Notional Amount |  |  | Fixed Interest Rate |  | Maturity |  | December 31 , 2018 |  |  | June 30, 2018 |
December 18, 2015 |  |  | 15,000 |  |  |  | 1.46 | % | December 19, 2018 |  |  | - |  |  |  | 55 |
December 19, 2015 |  |  | 10,000 |  |  |  | 2.01 | % | December 19, 2019 |  |  | 53 |  |  |  | 74 |
May 24, 2017 |  |  | 25,000 |  |  |  | 1.88 | % | April 24, 2022 |  |  | 448 |  |  |  | 764 |
May 24, 2017 |  |  | 25,000 |  |  |  | 1.67 | % | May 24, 2020 |  |  | 302 |  |  |  | 432 |
August 6, 2018 |  |  | 25,000 |  |  |  | 2.83 | % | August 6, 2023 |  |  | (454 | ) |  |  | - |
|  |  |  |  |  |  |  |  |  |  | $ | 349 |  |  | $ | 1,325 |
The Company reported no losses for the three and six months ended December 31, 2018, 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 collections from customers and loan payments between subsidiaries. The Company enters into such contracts for hedging purposes only. The Company has designated certain of these currency contracts as hedges, and changes in the fair value of these contracts are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with these contracts will be reported in net income. At December 31, 2018 and June 30, 2018, the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealized losses of $( 5.9 ) million and $( 2.9 ) million, respectively, which approximate the unrealized gains and losses on the related loans. The contracts have maturity dates ranging from 2019 - 2023, which correspond to the related intercompany loans. The notional amounts of the Company’s forward contracts, by currency, are as follows:
Currency |  | December 31 , 201 8 |  |  | June 30, 201 8 |
USD |  |  | 59,786 |  |  |  | 64,558 |
Euro |  |  | 12,150 |  |  |  | 21,300 |
Pound Sterling |  |  | 6,750 |  |  |  | 6,826 |
Peso |  |  | 54,000 |  |  |  | 54,000 |
Canadian |  |  | 20,600 |  |  |  | 20,600 |
The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet (in thousands):
| Asset Derivatives |
| December 31 , 201 8 |  | June 30, 2 01 8 |
Derivative designated as hedging instruments | Balance Sheet Line Item |  | Fair Value |  | Balance Sheet Line Item |  | Fair Value |
Interest rate swaps | Other Assets |  | $ | 803 |  | Other Assets |  | $ | 1,325 |
Foreign exchange contracts | Other Assets |  |  | - |  | Other Assets |  |  | 1,357 |
|  |  | $ | 803 |  |  |  | $ | 2,682 |
| Liability Derivatives |
| December 31 , 201 8 |  | June 30, 201 8 |
Derivative designated as hedging instruments | Balance Sheet Line Item |  | Fair Value |  | Balance Sheet Line Item |  | Fair Value |
Interest rate swaps | Accrued Liabilities |  |  | 454 |  | Accrued Liabilities |  |  | - |
Foreign exchange contracts | Accrued Liabilities |  |  | 5,853 |  | Accrued Liabilities |  |  | 4,204 |
|  |  | $ | 6,307 |  |  |  | $ | 4,204 |
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, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Interest rate swaps |  | $ | (1,768 | ) |  | $ | 131 |  |  | $ | (1,371 | ) |  | $ | 417 |
Foreign exchange contracts |  |  | (2,969 | ) |  |  | (2,482 | ) |  |  | (3,003 | ) |  |  | (1,994 | )
|  | $ | (4,737 | ) |  | $ | (2,351 | ) |  | $ | (4,374 | ) |  | $ | (1,577 | )
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 Income (Loss) Components |  | Three Months Ended December 31, |  |  | Six Months Ended December 31, |  | Affected line item in the Unaudited Condensed Statements
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |  | of Operations
Interest rate swaps |  | $ | (101 | ) |  | $ | 913 |  |  | $ | (162 | ) |  | $ | 1,064 |  | Interest expense
Foreign exchange contracts |  |  | 3,032 |  |  |  | - |  |  |  | 2,434 |  |  |  | - |  | Interest expense
|  | $ | 2,931 |  |  | $ | 913 |  |  | $ | 2,272 |  |  | $ | 1,064 |  |

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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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- References No definition available. + Details
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