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Financial Instruments Measured At Fair Value | 6 Months Ended
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Dec. 31, 2011
Financial Instruments Measured At Fair Value [Abstract] |
Financial Instruments Measured At Fair Value |
13. | 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 by level within the fair value hierarchy assets and liabilities measured at fair value on a recurring basis as of December 31, 2011:
|  | Total |  |  | Quoted prices in active markets (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 3,910 |  |  |  | — |  |  | $ | 3,910 |  |  |  | — |
Forward foreign currency contracts |  |  | 312 |  |  |  | — |  |  |  | 312 |  |  |  | — |
Available for sale securities |  |  | 4,789 |  |  | $ | 4,789 |  |  |  | — |  |  |  | — |
|  | $ | 9,011 |  |  | $ | 4,789 |  |  | $ | 4,222 |  |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration, of which $14,941 is noncurrent |  | $ | 23,680 |  |  |  | — |  |  |  | — |  |  | $ | 23,680 |
Total |  | $ | 23,680 |  |  |  | — |  |  |  | — |  |  | $ | 23,680 |
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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign currency contracts |  | $ | 766 |  |  |  | — |  |  | $ | 766 |  |  |  | — |
Contingent consideration, of which $13,244 is noncurrent |  |  | 37,145 |  |  |  | — |  |  |  | — |  |  | $ | 37,145 |
Total |  | $ | 37,911 |  |  |  | — |  |  | $ | 766 |  |  | $ | 37,145 |
Available for sale securities consist of the Company's investment in YHS (see Note 12). 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 Daniels Group in October 2011, 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 six months ended December 31, 2011, the Company reassessed the fair value of the contingent consideration for each of these acquisitions, resulting in additional expense of $900. The following table summarizes the Level 3 activity:
|  | Six months ended December 31, 2011 |
Balance as of June 30, 2011 |  | $ | 37,145 |
Fair value of initial contingent consideration |  |  | 18,355 |
Accretion of interest expense on contingent consideration |  |  | 460 |
Contingent consideration adjustment expense |  |  | 900 |
Contingent consideration paid |  |  | (32,660 | )
Translation adjustment |  |  | (520 | )
Balance as of December 31, 2011 |  | $ | 23,680 |
There were no transfers of financial instruments between the three levels of fair value hierarchy during the six months ended December 31, 2011. The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair values because of the relatively short-term maturity of these items. Cash Flow Hedges The Company primarily has exposure to changes in foreign currency exchange rates relating to certain anticipated cash flows from its international operations. To reduce that risk, the Company may enter into certain derivative financial instruments, when available on a cost-effective basis, to manage such risk. Derivative financial instruments are not used for speculative purposes. 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. The notional and fair value amounts of the Company's foreign exchange derivative contracts at December 31, 2011 were $15,135 and $312 of net assets. The fair value of these derivatives is included in prepaid expenses and other current assets and accrued expenses and other current liabilities on the Company's condensed consolidated balance sheet. 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 OCI and recognized in earnings when the hedged item affects earnings. These foreign exchange contracts have maturities over the next 13 months. There were $13,650 of notional amount and $766 of net liabilities of foreign exchange derivative contracts outstanding at June 30, 2011. 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 six months ended December 31, 2011, 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 six months ended December 31, 2011. The impact on other comprehensive income from foreign exchange contracts that qualified as cash flow hedges was as follows:
|  | Six months ended December 31, 2011 |
Net carrying amount at June 30, 2011 |  | $ | (572 | )
Cash flow hedges deferred in OCI |  |  | 1,079 |
Changes in deferred taxes |  |  | (273 | )
Net carrying amount at December 31, 2011 |  | $ | 234 |

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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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