XML 59 R15.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Derivatives and Hedging Activities | 6 Months Ended
--- | ---
Dec. 31, 2019
General Discussion of Derivative Instruments and Hedging Activities [Abstract] |
Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company's results of operations could be materially impacted by significant changes in foreign currency exchange rates and interest rates. In an effort to manage the exposure to these risks, the Company periodically enters into various derivative instruments. The Company's accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with U.S. GAAP. The Company records all derivatives on the consolidated balance sheet at fair value. Derivatives that are not designated as hedging instruments or the ineffective portions of cash flow hedges are adjusted to fair value through earnings in other income and expense. Foreign Currency Derivatives – The Company conducts a portion of its business internationally in a variety of foreign currencies. The exposure to market risk for changes in foreign currency exchange rates arises from foreign currency-denominated assets and liabilities and transactions arising from non-functional currency financing or trading activities. The Company’s objective is to preserve the economic value of non-functional currency-denominated cash flows. The Company attempts to hedge transaction exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through forward contracts or other hedging instruments with third parties. These contracts hedge the exchange of various currencies, including the U.S. dollar, Brazilian real, euro, British pound, Canadian dollar, Mexican peso, Chilean peso, Colombian peso, and Peruvian nuevo sol. While the Company utilizes foreign exchange contracts to hedge foreign currency exposure, the Company's foreign exchange policy prohibits the use of derivative financial instruments for speculative purposes. The Company had contracts outstanding for purposes of managing cash flows with notional amounts of $112.8 million and $110.7 million for the exchange of foreign currencies at December 31, 2019 and June 30, 2019, respectively. To date, the Company has chosen not to designate these derivatives as hedging instruments, and accordingly, these instruments are adjusted to fair value through earnings in other income and expense. Summarized financial information related to these derivative contracts and changes in the underlying value of the foreign currency exposures included in the Condensed Consolidated Income Statements for the quarters and six months ended December 31, 2019 and 2018 are as follows:
| Quarter ended |  | Six months ended
| December 31, |  | December 31,
| 2019 |  | 2018 |  | 2019 |  | 2018
| (in thousands)
Net foreign exchange derivative contract losses (gains) | $ | 2,315 |  |  | $ | (964 | ) |  | $ | 200 |  |  | $ | (948 | )
Net foreign currency transactional and re-measurement (gains) losses | (2,417 | ) |  | 1,384 |  |  | (391 | ) |  | 1,465 |
Net foreign currency exchange (gains) losses | $ | (102 | ) |  | $ | 420 |  |  | $ | (191 | ) |  | $ | 517 |
Net foreign currency exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign currency exchange contract gains and losses and are included in other income and expense. Foreign currency exchange gains and losses are generated as the result of fluctuations in the value of the U.S. dollar versus the Brazilian real, the U.S. dollar versus the euro, British pound versus the euro and other currencies versus the U.S. dollar. Interest Rates - The Company’s earnings are also affected by changes in interest rates due to the impact those changes have on interest expense from floating rate debt instruments. The Company manages its exposure to changes in interest rates by using interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating rate debt. The Company entered into an interest rate swap agreement, which was subsequently settled, and entered into a new amended agreement on April 30, 2019. The swap agreement has a notional amount of $100.0 million, with a $50.0 million tranche scheduled to mature on April 30, 2024 and a $50.0 million tranche scheduled to mature April 30, 2026. This swap agreement is designated as a cash flow hedge to hedge the variable rate interest payments on the revolving credit facility. Interest rate differentials paid or received under the swap agreement are recognized as adjustments to interest expense. To the extent the swap is effective in offsetting the variability of the hedged cash flows, changes in the fair value of the swap are not included in current earnings but are reported as other comprehensive income (loss). There was no ineffective portion to be recorded as an adjustment to earnings for the quarters ended December 31, 2019 and 2018. The components of the cash flow hedge included in the Condensed Consolidated Statement of Comprehensive (Loss) Income for the quarters and six months ended December 31, 2019 and 2018, are as follows:
|  | Quarter ended |  | Six months ended
|  | December 31, |  | December 31,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
|  | (in thousands)
Net interest expense (income) recognized as a result of interest rate swap |  | $ | 136 |  |  | $ | (57 | ) |  | $ | 163 |  |  | $ | 83 |
Unrealized gain (loss) in fair value of interest rate swap |  | 1,068 |  |  | (751 | ) |  | (372 | ) |  | (699 | )
Net increase (decrease) in accumulated other comprehensive (loss) income |  | $ | 1,204 |  |  | $ | (808 | ) |  | $ | (209 | ) |  | $ | (616 | )
Income tax effect |  | 304 |  |  | (193 | ) |  | (38 | ) |  | (147 | )
Net increase (decrease) in accumulated other comprehensive (loss) income, net of tax |  | $ | 900 |  |  | $ | (615 | ) |  | $ | (171 | ) |  | $ | (469 | )
The Company used the following derivative instruments at December 31, 2019 and June 30, 2019, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:
|  |  | December 31, 2019 |  | June 30, 2019
| Balance Sheet Location |  | Fair Value of Derivatives Designated as Hedge Instruments |  | Fair Value of Derivatives Not Designated as Hedge Instruments |  | Fair Value of Derivatives Designated as Hedge Instruments |  | Fair Value of Derivatives Not Designated as Hedge Instruments
|  |  | (in thousands)
Derivative assets: |  |  |  |  |  |  |  |  |
Foreign exchange contracts | Prepaid expenses and other current assets |  | $ | — |  |  | $ | 125 |  |  | $ | — |  |  | $ | 165 |
Derivative liabilities: |  |  |  |  |  |  |  |  |
Foreign exchange contracts | Accrued expenses and other current liabilities |  | $ | — |  |  | $ | 320 |  |  | $ | — |  |  | $ | 168 |
Interest rate swap agreement | Other long-term liabilities |  | $ | 3,627 |  |  | $ | — |  |  | $ | 3,504 |  |  | $ | — |

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_GeneralDiscussionOfDerivativeInstrumentsAndHedgingActivitiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration