Derivatives

12 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

13. Derivatives

We monitor our exposure to foreign currency exchange rates and interest rates and from time-to-time use derivatives to manage certain of these risks. The foreign currency derivatives generally have an expiration or maturity of two years or less and are intended to hedge cash flows related to the purchase of inventory. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). We record the portion of the changes in the value of the derivative, related to a hedged asset or liability (the effective portion), in accumulated other comprehensive income (loss). As the hedged item is sold, we recognize the gain or loss recorded in accumulated other comprehensive income (loss) to the consolidated statements of operations on the same line where the hedged item is charged when released/sold. We immediately recognize in the consolidated statements of operations in the same line as the hedged item, the portion of the changes in fair value of derivatives used as cash flow hedges that is not offset by changes in the expected cash flows related to a recognized asset or liability (the ineffective portion).

We routinely assess whether the derivatives used to hedge transactions are effective. If we determine a derivative ceases to be an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.

We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see “—Fair Value Measurements.”

The following table details the Company’s outstanding derivatives that are designated and effective as cash flow hedges as of June 30, 2017:

Instrument	Hedge	Notional amount at June 30, 2017	Fair value as of June 30,
Instrument	Hedge	Notional amount at June 30, 2017	2017			2016
Options	Brazilian Real calls	R$ 39,000		$	2,686		$	3,027
Options	Brazilian Real puts	R$ 39,000		$	—		$	(372)

The fair values as of June 30, 2017, are unrealized and will fluctuate based on future exchange rates until the derivative contracts mature. Other comprehensive income (loss) included $31 of unrecognized gains for the twelve months ended June 30, 2017. Accumulated other comprehensive income (loss) at June 30, 2017 included $2,686 of net unrecognized gains on derivative instruments; we estimate that $1,759 of those gains will be recognized in earnings within the next twelve months. At June 30, 2017, realized gains of $1,011 related to matured contracts were recorded as a component of inventory. We anticipate these gains will be recognized as an offset to cost of goods sold within the next twelve months. At June 30, 2016, realized losses of $1,528 related to matured contracts were recorded as a component of inventory and subsequently recognized in cost of goods sold during 2017. We recognize gains (losses) related to these derivative instruments as a component of cost of goods sold at the time the hedged item is sold.