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Note 10 - Derivative Financial Instruments
 3 Months Ended
Sep. 30, 2025
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

10)      Derivative Financial Instruments

 

Information about the Company’s derivative financial instruments is as follows:

 

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 consolidated balance sheets at fair value. The Company designates its interest rate swap agreements, including those that may be forward-dated, as cash flow hedges, and changes in the fair value of the swaps are recognized in accumulated other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps is reported in earnings within interest expense.

 

The Company’s effective swap agreements convert the base borrowing rate on $225 million of debt due under our Facility from a variable rate equal to 1 month Secured Overnight Financing Rate (SOFR) to a weighted average fixed rate of 3.48% at September 30, 2025. The fair value of the swaps, recognized in accumulated other comprehensive income, is as follows (in thousands, except percentages):

 

Effective Date

 

Notional Amount

  

Fixed Interest Rate

 

Maturity

 

September 30, 2025

  

June 30, 2025

 

August 30, 2025

 $225,000   3.48%

August 30, 2028

 $(1,181) $- 

 

The Company reported no losses for the three months ended September 30, 2025, 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.  At September 30, 2025 and June 30, 2025, the Company had outstanding forward contracts related to hedge of intercompany loans with net unrealized gains and losses of less than $0.5 million, which approximate the unrealized losses and gains on the related loans. The contract matures in October 2025.

 

The notional amounts of the Company’s forward contracts, by currency, are as follows (in thousands):

 

Currency

 

September 30, 2025

  

June 30, 2025

 

JPY

 $-  $1,950,000 

JPY

 $3,250,000  $1,300,000 

 

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

Liability Derivatives

 

Derivative designated

September 30, 2025

 

June 30, 2025

 

as hedging instruments

Balance Sheet Line Item

 

Fair Value

 

Balance Sheet Line Item

 

Fair Value

 

Interest rate swaps

Accrued liabilities

 $1,181   $- 

Foreign exchange contracts

Accrued liabilities

  501 

Accrued liabilities

  68 
   $1,682   $68 
 

The table below presents the amount of gain (loss) recognized in comprehensive income on our derivative financial instruments (effective portion) designated as hedging instruments, excluding diminished foreign exchange contracts, along with their classification within comprehensive income for the periods ended (in thousands):

 

 

  

Three Months Ended September 30,

 
  

2025

  

2024

 

Interest rate swaps

 $(1,025) $(384)

 

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

 

Three Months Ended

 

Affected line item in the Unaudited

Comprehensive Income (Loss) Components

  September 30, 2025   September 30, 2024 

Condensed Statements of Operations

Interest rate swaps

 $(155) $(1,697)

Interest expense