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Note O - Derivative Financial Instruments | 3 Months Ended
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Sep. 30, 2022
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
O. | Derivative Financial Instruments
From time to time, the Company enters into derivative instruments to manage volatility arising from risks relating to interest rates and foreign exchange. The Company does not purchase, hold or sell derivative financial instruments for trading purposes. The Company’s practice is to terminate derivative transactions if the underlying asset or liability matures or is sold or terminated, or if it determines the underlying forecasted transaction is no longer probable of occurring. The Company reports all derivative instruments on its consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of transactions entered into for hedging purposes. Interest Rate Swap Contracts The Company has one outstanding interest rate swap contract as of September 30, 2022, with a notional amount of $13,000. It has been designated as a cash flow hedge in accordance with ASC 815, Derivatives and Hedging. The primary purpose of the Company’s cash flow hedging activities is to manage the potential changes in value associated with interest payments on the Company’s SOFR-based indebtedness. The Company records gains and losses on interest rate swap contracts qualifying as cash flow hedges in accumulated other comprehensive loss to the extent that these hedges are effective and until the Company recognizes the underlying transactions in net earnings, at which time these gains and losses are recognized in interest expense on its consolidated statements of operations and comprehensive (loss) income. Cash flows from derivative financial instruments are classified as cash flows from financing activities on the consolidated statements of cash flows. These contracts generally have original maturities of greater than twelve months. Net unrealized after-tax income related to cash flow hedging activities that were included in accumulated other comprehensive loss were ($705) and ($355) as of September 30, 2022 and June 30, 2022, respectively. The unrealized amounts in accumulated other comprehensive loss will fluctuate based on changes in the fair value of open contracts during each reporting period. The Company estimates that $214 of net unrealized losses related to cash flow hedging activities included in accumulated other comprehensive loss will be reclassified into earnings within the next twelve months. Derivatives Designated as Net Investment Hedges The Company is exposed to foreign currency exchange risk related to its investment in net assets in foreign countries. As discussed in Note J, Long-term Debt, during the fourth quarter of fiscal 2021, the Company designated its euro denominated Revolving Loan, with a notional amount of €13,000, as a net investment hedge to mitigate the risk of variability in its euro denominated net investments in wholly-owned foreign subsidiaries. All changes in the fair value of the euro revolver were then recorded in accumulated other comprehensive loss along with the foreign currency translation adjustments on those foreign investments. Net unrealized after-tax income (loss) related to net investment hedging activities that were included in accumulated other comprehensive loss were ($1,995) and ($1,551) as of September 30, 2022 and June 30, 2022, respectively. Fair Value of Derivative Instruments The fair value of derivative instruments included in the condensed consolidated balance sheets were as follows:
| Balance Sheet Location |  | September 30, 2022 |  |  | June 30, 2022 |
Derivative designated as hedge: |  |  |  |  |  |  |  |  |
Interest rate swap | Other current assets |  | $ | 214 |  |  | $ | 68 |
Interest rate swap | Other noncurrent assets |  |  | 279 |  |  |  | 77 |
The impact of the Company’s derivative instruments on the condensed consolidated statements of operations and comprehensive (loss) income for the quarters ended September 30, 2022 and September 24, 2021, respectively, was as follows:
| Statement of Comprehensive |  | For the Quarter Ended |
| (Loss) Income Location |  | September 30, 2022 |  |  | September 24, 2021 |
Derivative designated as hedge: |  |  |  |  |  |  |  |  |
Interest rate swap | Interest expense |  | $ | 84 |  |  | $ | 90 |
Interest rate swap | Unrealized gain (loss) on cash flow hedge |  |  | 349 |  |  |  | 68 |
Net investment hedge | Unrealized gain on hedges |  |  | 444 |  |  |  | 136 |

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- 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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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