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Financial Instruments Measured At Fair Value
 6 Months Ended
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