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Derivatives

12 Months Ended

Jun. 30, 2024

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 that 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 “Note 15— Fair Value Measurements.”

We are a party to an interest rate swap agreement on $300,000 of notional principal that effectively converts the floating portion of our interest obligation on that amount of debt to a fixed interest rate of 0.61% through June 2025. We designated the interest rate swap as a highly effective cash flow hedge.

We are a party to foreign currency option contracts used to hedge cash flows related to monthly inventory purchases. The individual option contracts mature monthly through December 2024. 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 swap 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		2024			2023
Other current assets
Foreign currency option contracts, net		$	39		$	333
Interest rate swap			13,151			14,031
Other assets
Foreign currency option contracts, net			—			—
Interest rate swap			—			10,225
Accrued expense and other current liabilities
Foreign currency option contracts, net			(41)			—
Interest rate swaps			—			—
Total Fair Value
Foreign currency option contracts, net			(2)			333
Interest rate swap			13,151			24,256

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



As of June 30		2024
Interest rate swap		$	300,000
Brazil Real-USD call options		R$	36,000
Brazil Real-USD put options		R$	(36,000)
USD-Israel shekel call options		$	(3,043)
USD-Israel shekel put options		$	3,043

The consolidated statements of operations and statements of other comprehensive income (“OCI”) for the years ended June 30, 2024 and 2023 included the effects of derivatives as follows:



For the Year Ended June 30		2024			2023
Foreign currency option contracts, net
(Income) expense recorded in consolidated statements of operations		$	(1,126)		$	1,237
Consolidated statement of operations - total cost of goods sold		$	704,587		$	679,652
Consolidated statement of operations - total selling, general and administrative expenses		$	259,777		$	226,390
(Income) expense recorded in comprehensive income		$	380		$	270
Interest rate swap
(Income) expense recorded in consolidated statements of operations		$	(14,503)		$	(9,870)
Consolidated statement of operations - total interest expense, net		$	18,536		$	15,321
(Income) expense recorded in comprehensive income		$	11,105		$	(3,968)

We recognize gains and losses related to certain foreign currency derivatives as a component of cost of goods sold at the time the hedged item is sold. Inventory as of June 30, 2024 included realized net gains of $1,142 related to matured contracts. We anticipate the net gains included in inventory will be recognized in cost of goods sold within the next 12 months.