XML 21 R11.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Derivative Instruments | 6 Months Ended
--- | ---
Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments Derivative Instruments Held Coffee-Related Derivative Instruments The Company is exposed to commodity price risk associated with its price to be fixed green coffee purchase contracts, which are described further in Note 2, “Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements in the 2021 Form 10-K. The Company utilizes forward and option contracts to manage exposure to the variability in expected future cash flows from forecasted purchases of green coffee attributable to commodity price risk. Certain of these coffee-related derivative instruments utilized for risk management purposes have been designated as cash flow hedges, while other coffee-related derivative instruments have not been designated as cash flow hedges or do not qualify for hedge accounting despite hedging the Company’s future cash flows on an economic basis. The following table summarizes the notional volumes for the coffee-related derivative instruments held by the Company at December 31, 2021 and June 30, 2021:
(In thousands) |  | December 31, 2021 |  | June 30, 2021
Derivative instruments designated as cash flow hedges: |  |  |  |
Long coffee pounds |  | 14,663 |  |  | 14,625 |
Derivative instruments not designated as cash flow hedges: |  |  |  |
Long coffee pounds |  | 2,921 |  |  | 6,886 |
Total |  | 17,584 |  |  | 21,511 |
Coffee-related derivative instruments designated as cash flow hedges outstanding as of December 31, 2021 will expire within 15 months. At December 31, 2021 and June 30, 2021 approximately 83% and 68%, respectively, of the Company's outstanding coffee-related derivative instruments were designated as cash flow hedges. Interest Rate Swap Derivative Instruments Pursuant to an International Swap Dealers Association, Inc. (“ISDA”) Master Agreement which was effective March 20, 2019, the Company on March 27, 2019, entered into an interest rate swap transaction utilizing a notional amount of $80.0 million, with an effective date of April 11, 2019 and a maturity date of October 11, 2023 (the “Rate Swap”). In December 2019, the Company amended the notional amount to $65.0 million. The Rate Swap is intended to manage the Company’s interest rate risk on its floating-rate indebtedness under the Company’s revolving credit facility. Under the terms of the Rate Swap, the Company receives 1-month LIBOR, subj ect to a 0% fl oor, and makes payments based on a fixed rate of 2.1975%. The Company had designated the Rate Swap derivative instrument as a cash flow hedge; however, during the three months ended September 30, 2020, the Company de-designated the Rate Swap derivative instrument. As a result, the balance in accumulated other comprehensive income, or “AOCI” was frozen at the time of de-designation. The Company recognized $0.3 million and $0.6 million, respectively, out of AOCI and into interest expense for the three and six months ended December 31, 2021. The remaining balance of $2.0 million froz en in AOCI will be amortized over the life of the Rate Swap through October 11, 2023. In connection with a new revolver credit facility agreement in April 2021 (see Note 11 for details), the Company also executed a new ISDA agreement (the “Amended Rate Swap”) to transfer its interest swap to Wells Fargo Bank, N.A. (“Wells Fargo”). Under the terms of the Amended Rate Swap, the Company receives 1-month LIBOR, subject to a 0% floor, and makes payments based on a fixed rate of 2.4725%, an increase of 0.275% from its original Rate Swap fixed rate of 2.1975%. The Amended Rate Swap utilizes the same notional amount of $65.0 million and maturity date of October 11, 2023 as the original interest rate swap. The Company did not designate the Amended Rate Swap as a cash flow hedge. The Company’s obligations under the Amended Rate Swap are secured by the collateral which secures the loans under the new Revolver Credit Facility (see Note 11 for details) on a pari passu and pro rata basis with the principal of such loans. Effect of Derivative Instruments on the Financial Statements Balance Sheets Fair values of derivative instruments on the Company’s consolidated balance sheets:
|  | Derivative Instruments Designated as Cash Flow Hedges |  | Derivative Instruments Not Designated as Accounting Hedges
(In thousands) |  | December 31, 2021 |  | June 30, 2021 |  | December 31, 2021 |  | June 30, 2021
Financial Statement Location: |  |  |  |  |  |  |  |
Short-term derivative assets: |  |  |  |  |  |  |  |
Coffee-related derivative instruments |  | $ | 8,783 |  |  | $ | 3,823 |  |  | $ | 1,238 |  |  | $ | 528 |
Long-term derivative assets: |  |  |  |  |  |  |  |
Coffee-related derivative instruments (1) |  | — |  |  | 292 |  |  | — |  |  | — |
Short-term derivative liabilities: |  |  |  |  |  |  |  |
Coffee-related derivative instruments |  | 25 |  |  | 20 |  |  | 788 |  |  | 3 |
Interest rate swap derivative instruments |  | — |  |  | — |  |  | 1,331 |  |  | 1,532 |
Long-term derivative liabilities: |  |  |  |  |  |  |  |
Coffee-related derivative instruments (2) |  | — |  |  | — |  |  | — |  |  | — |
Interest rate swap derivative instruments (2) |  | — |  |  | — |  |  | 710 |  |  | 1,653 |
________________ (1) Included in “Other assets” on the Company's consolidated balance sheets. (2) Included in “Other long-term liabilities” on the Company's consolidated balance sheets. Statements of Operations The following table presents pretax net gains and losses for the Company's derivative instruments designated as cash flow hedges, as recognized in “AOCI,” “Cost of goods sold” and “Other, net”.
|  | Three Months Ended December 31, |  | Six Months Ended December 31, |  | Financial Statement Classification
(In thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020 |
Net losses recognized in AOCI - Interest rate swap |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (304) |  |  | AOCI
Net losses recognized from AOCI to earnings - Interest rate swap |  | (4) |  |  | (9) |  |  | (4) |  |  | (344) |  |  | Interest Expense
Net losses reclassified from AOCI to earnings for de-designated Interest rate swap |  | (304) |  |  | (320) |  |  | (618) |  |  | (659) |  |  | Interest Expense
Net gains (losses) recognized in AOCI - Coffee-related |  | 5,132 |  |  | 3,101 |  |  | 10,991 |  |  | 7,366 |  |  | AOCI
Net gains (losses) recognized in earnings - Coffee - related |  | 3,712 |  |  | 240 |  |  | 5,632 |  |  | 604 |  |  | Cost of goods sold
For the three and six months ended December 31, 2021 and 2020, there were no ga ins or losses recognized in earnings as a result of excluding amounts from the assessment of hedge effectiveness. Net (gains) losses on derivative instruments in the Company’s consolidated statements of cash flows also include net (gains) losses on coffee-related derivative instruments designated as cash flow hedges reclassified to cost of goods sold from AOCI in the three months ended December 31, 2021 and 2020. Gains and losses on coffee-related derivative instruments not designated as accounting hedges are included in “Other, net” in the Company’s consolidated statements of operations and in Net (gains) losses on derivative instruments in the Company’s consolidated statements of cash flows. Net gains and losses recorded in “Other, net” are as follows:
|  | Three Months Ended December 31, |  | Six Months Ended December 31,
(In thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Net gains on coffee-related derivative instruments(1) |  | $ | 872 |  |  | $ | 1,338 |  |  | $ | 2,422 |  |  | $ | 1,834 |
Non-operating pension and other postretirement benefits(2) |  | 895 |  |  | 7,744 |  |  | 1,789 |  |  | 15,488 |
Other gains (losses), net |  | — |  |  | (2) |  |  | — |  |  | 317 |
Other, net |  | $ | 1,767 |  |  | $ | 9,080 |  |  | $ | 4,211 |  |  | $ | 17,639 |
___________ (1) Excludes net gains and losses on coffee-related derivative instruments designated as cash flow hedges recorded in cost of goods sold in the three and six months ended December 31, 2021 and 2020. (2) Presented in accordance with ASU 2017-07. Offsetting of Derivative Assets and Liabilities The Company has agreements in place that allow for the financial right of offset for derivative assets and liabilities at settlement or in the event of default under the agreements. Additionally, under certain coffee derivative agreements, the Company maintains accounts with its counterparties to facilitate financial derivative transactions in support of its risk management activities. The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:
(In thousands) |  |  |  | Gross Amount Reported on Balance Sheet |  | Netting Adjustments |  | Cash Collateral Posted |  | Net Exposure
December 31, 2021 |  | Derivative Assets |  | $ | 10,021 |  |  | $ | (813) |  |  | $ | — |  |  | $ | 9,208 |
|  | Derivative Liabilities |  | 2,854 |  |  | (813) |  |  | — |  |  | 2,041 |
June 30, 2021 |  | Derivative Assets |  | 4,643 |  |  | (23) |  |  | — |  |  | 4,620 |
|  | Derivative Liabilities |  | 3,208 |  |  | (23) |  |  | — |  |  | 3,185 |
Cash Flow Hedges Changes in the fair value of the Company’s coffee-related derivative instruments designated as cash flow hedges are deferred in AOCI and subsequently reclassified into cost of goods sold in the same period or periods in which the hedged forecasted purchases affect earnings, or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. Based on recorded values at December 31, 2021, $11.7 million of net gains on coffee-related derivative instruments designated as a cash flow hedge are expected to be reclassified into cost of goods sold within the next twelve months. These recorded values are based on market prices of the commodities as of December 31, 2021. The Company had designated the Rate Swap derivative instrument as a cash flow hedge; however, during the three months ended September 30, 2020, the Company de-designated the Rate Swap derivative instrument. The frozen AOCI is subsequently reclassified into interest expense in the period or periods when the hedged transaction affects earnings or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. As of December 31, 2021, $1.2 million of net losses on the Rate Swap de-designated as a cash flow hedge are expected to be reclassified into interest expense within the next twelve months.

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

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 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 http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration