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Note 10 - Derivative Financial Instruments

12 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

10. Derivative Financial Instruments

Interest Rate Swaps

The Company’s effective swap agreements convert the base borrowing rate on $175 million of debt due under our revolving credit agreement from a variable rate equal to one month Secured Overnight Financing Rate (SOFR) to a weighted average fixed rate of 1.13% at June 30, 2023.

The fair value of the swaps recognized in accrued liabilities and in other comprehensive income (loss) is as follows (in thousands):

Effective Date		*Notional*				*Fixed*		*Maturity*		*Fair Value at June 30,*
		*Amount*				*Interest Rate*				*2023*				*2022*
February 6, 2023			25,000			2.80%		August 6, 2023		$	59			$	48
February 23, 2023			100,000			0.86%		March 23, 2025			6,716				5,538
May 25, 2023			25,000			0.81%		April 24, 2025			1,777				1,447
February 24, 2023			25,000			0.86%		March 24, 2025			1,683				1,387
										$	10,235			$	8,420

The Company reported no losses for the years ended June 30, 2023, 2022, and 2021, 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 sales to foreign 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 June 30, 2023 and 2022, the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealized losses of $1.7 million and $0.6 million, respectively, which approximate the unrealized gains or losses on the related loans. The contracts have maturity dates ranging from fiscal year 2024 to 2025, which correspond to the related intercompany loans. The notional amounts of these instruments, by currency in thousands, are as follows:

Currency		*2023*				*2022*
EUR			-				5,750
CAD			16,600				16,600
JPY			2,100,000				1,000,000

The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet at June 30, (in thousands):

	*Asset Derivatives*
	*2023*					*2022*
Derivative designated as	*Balance*					*Balance*
hedging instruments	*Sheet*					*Sheet*
	*Line Item*		*Fair Value*			*Line Item*		*Fair Value*
Interest rate swaps	Prepaid expenses and other current assets		$	10,235		Prepaid expenses and other current assets		$	8,420
Foreign exchange contracts	Prepaid expenses and other current assets			-		Prepaid expenses and other current assets			122
			$	10,235				$	8,542

	*Liability Derivatives*
	*2023*					*2022*
Derivative designated as	*Balance*					*Balance*
hedging instruments	*Sheet*					*Sheet*
	*Line Item*		*Fair Value*			*Line Item*		*Fair Value*
Interest rate swaps	Accrued Liabilities		$	-		Accrued Liabilities		$	-
Foreign exchange contracts	Accrued Liabilities			315		Accrued Liabilities			-
			$	315				$	-

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):

		*2023*				*2022*				*2021*
Interest rate swaps		$	6,567			$	9,552			$	1,284
Foreign exchange contracts			(437	)			380				2,072
		$	6,130			$	9,932			$	3,356

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													*in the Statements*
Income (Loss) Components		*2023*				*2022*				*2021*			*of Operations*
Interest rate swaps		$	(4,704	)		$	1,964			$	2,287		Interest expense
Foreign exchange contracts			672				469				(557	)	Other non-operating income
		$	(4,032	)		$	2,433			$	1,730