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Financial Instruments Measured At Fair Value | 12 Months Ended
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Jun. 30, 2011
Financial Instruments Measured At Fair Value |
Financial Instruments Measured At Fair Value | 15. FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE The Company's financial assets and liabilities measured at fair value are required to be grouped in one of three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:
| • |  | Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
| • |  | Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;
| • |  | Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).
The following table presents assets and (liabilities) measured at fair value on a recurring basis as of June 30, 2011:
|  | Total |  |  | Quoted prices in active markets (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 7,300 |  |  |  | — |  |  | $ | 7,300 |  |  |  | — |
Available for sale securities |  |  | 6,390 |  |  | $ | 6,390 |  |  |  | — |  |  |  | — |
|  | $ | 13,690 |  |  | $ | 6,390 |  |  | $ | 7,300 |  |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign currency contracts |  | $ | 766 |  |  |  |  |  |  | $ | 766 |  |  |  | — |
Contingent consideration |  |  | 37,145 |  |  |  | — |  |  |  | — |  |  | $ | 37,145 |
Total |  | $ | 37,911 |  |  |  | — |  |  | $ | 766 |  |  | $ | 37,145 |
The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2010:
|  | Total |  |  | Quoted prices in active markets (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 10,586 |  |  |  | — |  |  | $ | 10,586 |  |  |  | — |
Available for sale securities |  |  | 6,232 |  |  | $ | 6,232 |  |  |  | — |  |  |  | — |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign currency contracts |  |  | 256 |  |  |  | — |  |  |  | 256 |  |  |  | — |
|  | $ | 17,074 |  |  | $ | 6,232 |  |  | $ | 10,842 |  |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign currency contracts |  | $ | 57 |  |  |  | — |  |  | $ | 57 |  |  |  | — |
Contingent consideration |  |  | 28,580 |  |  |  | — |  |  |  | — |  |  | $ | 28,580 |
Total |  | $ | 28,637 |  |  |  | — |  |  | $ | 57 |  |  | $ | 28,580 |
Available for sale securities consist of the Company's investment in YHS (see Note 14). Fair value is measured using the market approach based on quoted prices. The Company utilizes the income approach to measure fair value for its foreign currency forward contracts. The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates, and forward prices. In connection with the acquisitions of the assets and business of 3 Greek Gods, LLC in July 2010, the assets and business of World Gourmet Marketing LLC in June 2010, GG UniqeFiber AS in January 2011 and Churchill Products Limited in June 2010, payment of a portion of the respective purchase prices are contingent upon the achievement of certain operating results. We estimated the original fair value of the contingent consideration as the present value of the expected contingent payments, determined using the weighted probabilities of the possible payments. We are required to reassess the fair value of contingent payments on a periodic basis. During the fiscal year ended June 30, 2011, the Company reassessed the fair value of the contingent consideration for each of these acquisitions, resulting in additional expense of $443 related to the Greek Gods acquisition and a reduction of expense of $4,620 related to the World Gourmet acquisition (See Note 5). The following table summarizes the Level 3 activity:
Year ended June 30, |  | 2011 |  |  | 2010 |
Balance at beginning of year |  | $ | 28,580 |  |  |  | — |
Accretion of interest expense on contingent consideration |  |  | 1,691 |  |  |  | — |
Fair value of initial contingent consideration |  |  | 25,950 |  |  | $ | 28,580 |
Contingent consideration adjustment expense |  |  | (4,177 | ) |  |  | — |
Contingent consideration paid |  |  | (15,400 | ) |  |  |  |
Translation adjustment |  |  | 501 |  |  |  | — |
Balance at end of year |  | $ | 37,145 |  |  | $ | 28,580 |
There were no transfers of financial instruments between the three levels of fair value hierarchy during the years ended June 30, 2011 or 2010. Derivative Financial Instruments Cash Flow Hedges – Foreign Exchange Contracts The Company utilizes foreign currency contracts to hedge forecasted transactions, primarily intercompany transactions, on certain foreign currencies and designates these derivative instruments as foreign currency cash flow hedges when appropriate. Derivative financial instruments are not used for speculative purposes. The notional and fair value amounts of the Company's foreign exchange derivative contracts at June 30, 2011 and 2010 were $13,650 and $766 of net liabilities and $13,450 and $199 of net assets, respectively. The fair value of these derivatives is included on the Company's consolidated balance sheets in accrued expenses at June 30, 2011 and 2010. For these derivatives, which qualify as hedges of probable forecasted cash flows, the effective portion of changes in fair value is temporarily reported in Accumulated Other Comprehensive Income ("OCI") and recognized in earnings when the hedged item affects earnings. These foreign exchange contracts have maturities over the next 13 months. The Company assesses effectiveness at the inception of the hedge and on a quarterly basis. These assessments determine whether derivatives designated as qualifying hedges continue to be highly effective in offsetting changes in the cash flows of hedged items. Any ineffective portion of change in fair value is not deferred in accumulated OCI and is included in current period results. For the years ended June 30, 2011 and 2010, the impact of hedge ineffectiveness on earnings was not significant. The Company will discontinue cash flow hedge accounting when the forecasted transaction is no longer probable of occurring on the originally forecasted date or when the hedge is no longer effective. There were no discontinued foreign exchange hedges for the years ended June 30, 2011 and 2010. The impact on Other Comprehensive Income ("OCI") from foreign exchange contracts that qualified as cash flow hedges for the fiscal years ended June 30, 2011 and 2010 were as follows:
Year ended June 30, |  | 2011 |  |  | 2010 |
Net carrying amount at beginning of year |  | $ | 152 |  |  | $ | 201 |
Cash flow hedges deferred in OCI |  |  | (975 | ) |  |  | (81 | )
Change in deferred taxes |  |  | 251 |  |  |  | 32 |
Net carrying amount at end of year |  | $ | (572 | ) |  | $ | 152 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 159 -Paragraph 17-22, 27, 28 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15B -Subparagraph a, b -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 32, 33, 34 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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