XML 37 R22.htm IDEA: XBRL DOCUMENT

Derivatives

12 Months Ended

Jun. 30, 2023

Derivatives

14. 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. 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). All changes in the fair value of a highly effective cash flow hedge are recorded in accumulated other comprehensive income (loss).

We routinely assess whether the derivatives used to hedge transactions are effective. If we determine a derivative cease 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 “Note 15— Fair Value Measurements.”

In July 2017, we entered into an interest rate swap agreement on the first $150,000 of notional principal that effectively converted the floating LIBOR portion of our interest obligation on that amount of debt to a fixed interest rate of 1.83%. The agreement matured in June 2022. In March 2020, we entered into an interest rate swap agreement on an additional $150,000 of notional principal that effectively converted the floating LIBOR portion of our interest obligation on that amount of debt to a fixed rate of 0.62%. In July 2022, this agreement increased to a notional principal amount of $300,000. In November 2022, we amended the March 2020 interest rate swap agreement to convert the floating portion of our interest obligation to SOFR. The agreement effectively converts the floating portion of our interest obligation on $300,000 of debt to a fixed interest rate of 0.61% through June 2025. We have designated the interest rate swap as a highly effective cash flow hedge.

We entered into foreign currency option contracts to hedge cash flows related to monthly inventory purchases. The individual option contracts mature monthly through August 2023. The forecasted inventory purchases are probable of occurring and the individual option contracts were designated as highly effective cash flow hedges.

The consolidated balance sheet includes the net fair values of our outstanding foreign currency option contracts within the respective line items, based on the net financial position and maturity date of the individual contracts. The consolidated balance sheet includes the net fair values of our outstanding interest rate swaps within the respective balance sheet line items, based on the expected timing of the cash flows. The consolidated balance sheet includes assets

and liabilities for the fair values of outstanding derivatives that are designated and effective as cash flow hedges as follows:



As of June 30		2023			2022
Other current assets
Brazil Real options, net		$	333		$	498
Interest rate swap			14,031			7,417
Other assets
Brazil Real options, net			—			104
Interest rate swap			10,225			12,871
Total Fair Value
Brazil Real options, net			333			602
Interest rate swap			24,256			20,288

Notional amounts of the derivatives as of the balance sheet date were:



As of June 30		2023
Brazil Real call options		R$	10,000
Brazil Real put options		R$	10,000
Interest rate swap		$	300,000

The consolidated statements of operations and statements of other comprehensive income (“OCI”) for the years ended June 30, 2023 and 2022 included the effects of derivatives as follows:



For the Year Ended June 30		2023			2022
Brazil Real options, net
Expense recorded in consolidated statements of operations		$	1,237		$	1,124
Consolidated statement of operations - total cost of goods sold		$	679,652		$	656,861
Expense (income) recorded in OCI		$	270		$	(398)
Interest rate swap
(Income) expense recorded in consolidated statements of operations		$	(9,870)		$	2,905
Consolidated statement of operations - total interest expense, net		$	15,321		$	11,875
Income recorded in OCI		$	(3,968)		$	(21,283)

We recognize gains and losses related to foreign currency derivatives as a component of cost of goods sold at the time the hedged item is sold. Inventory as of June 30, 2023, included realized net gains of $1,016 related to matured contracts. We anticipate the net gains included in inventory will be recognized in cost of goods sold within the next twelve to eighteen months.