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Derivative Instruments and Hedging Activities
 9 Months Ended
Mar. 31, 2012
Derivative Instruments and Hedging Activities [Abstract]  
Derivative Instruments and Hedging Activities

9. Derivative Instruments and Hedging Activities

The Company may utilize from time to time derivative financial instruments to manage exposure to certain risks related to its ongoing operations. The primary risk managed through the use of derivative instruments is interest rate risk. In January 2011, the Company entered into an interest rate contract with an initial notional amount of $15,000 to hedge the changes in cash flows attributable to changes in the LIBOR rate associated with the five-year term loan entered into by the Company in March 2011. Under this interest rate contract, the Company pays a fixed interest rate of 3.94% and receives a variable rate based on LIBOR plus 1.85%. The notional amount of this interest rate contract is required to be 50% of the amount of the term loan through the expiration of its five-year term.

The Company is exposed to counter-party credit risk on any derivative instrument. Accordingly, as part of its risk management policy, the Company maintains strict counter-party credit guidelines and enters into any derivative instrument only with major financial institutions. The Company does not have significant exposure to any counterparty and management believes the risk of loss is remote and, in any event, would not be material.

Refer to “Note 2—Fair Value of Financial Instruments” for additional information regarding the fair value of the derivative instrument.

The following table summarizes the fair value of the Company’s derivative instrument and the line item in which it was recorded in the condensed consolidated balance sheet at March 31, 2012:

 

             
    Liability Derivative  
    Balance Sheet
Location		   Fair
Value		  

Derivative designated as hedging instrument:

            

Interest rate contract

   Accrued expenses   $ 193  
    Accrued retirement
costs and other		     259  
       

 

 

  
        $ 452  
       

 

 

  

 

R.G. BARRY CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

for the Third Quarter and Nine-month period of Fiscal 2012 and the Third Quarter and Nine-month period of Fiscal 2011

(dollar amounts in thousands, except per share data)

 

Cash Flow Hedges

The following table summarizes the loss recognized in other comprehensive income (“OCI”) and the loss reclassified from accumulated OCI into earnings for the derivative instrument designated as a cash flow hedge during the third quarter and the nine-month period of fiscal 2012.

 

                                         
    Loss (Gain)
Recognized in
OCI (Effective
Portion)		     Location of
Loss (Gain)
Reclassified from
Accumulated OCI
(Effective Portion)		     Loss Reclassified
from Accumulated
OCI (Effective
Portion)		     Location of
Loss (Ineffective
Portion) and
Excluded from
Effectiveness
Testing		     Loss (Ineffective
Portion) and
Excluded from
Effectiveness
Testing		  

For the third quarter of fiscal 2012:

                                        

Interest rate contract

   $ (21 )      Interest expense     $ 59       Interest expense     $ —    

For the nine-month period of fiscal 2012:

                                        

Interest rate contract

   $ 184       Interest expense     $ 192       Interest expense     $ —    

For the third quarter of fiscal 2011:

                                        

Interest rate contract

   $ 92       Interest expense     $ —         Interest expense     $ 13  

For the nine-month period of fiscal 2011:

                                        

Interest rate contract

   $ 92       Interest expense     $ —         Interest expense     $ 13  

The estimated net amount of the loss in accumulated OCI at March 31, 2012 expected to be reclassified into the consolidated statement of operations within the next twelve months is $193.