Note 10 - Derivative Financial Instruments

12 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

10. Derivative Financial Instruments

Interest Rate Swaps

The Company’s effective swap agreements convert the base borrowing rate on $200 million of debt due under our revolving credit agreement from a variable rate equal to LIBOR to a weighted average fixed rate of 1.27% at  June 30, 2020.

The fair value of the swaps recognized in accrued liabilities and in other comprehensive income (loss) at June 30, 2020 and 2019 is as follows (in thousands):

Effective Date	Notional		Fixed	Maturity	Fair Value at June 30,
	Amount		Interest Rate		2020			2019
December 19, 2015		10,000	2.01%	December 19, 2019	$	-		$	3
May 24, 2017		25,000	1.88%	April 24, 2022		(815	)		(190	)
May 24, 2017		25,000	1.67%	May 24, 2020		-			49
August 6, 2018		25,000	2.83%	August 6, 2023		(2,167	)		(1,242	)
March 23, 2020		100,000	0.91%	March 23, 2025		(2,485	)		-
April 24, 2020		25,000	0.88%	April 24, 2025		(585	)		-
May 24, 2020		25,000	0.91%	March 24, 2025		(615	)		-
					$	(6,667	)	$	(1,380	)

The Company reported no losses for the years ended June 30, 2020, 2019, and 2018, as a result of hedge ineffectiveness. Future changes in these swap arrangements, including termination of the agreements, may result in a reclassification of any gain or loss reported in accumulated other comprehensive income (loss) into earnings as an adjustment to interest expense.  Accumulated other comprehensive income (loss) related to these instruments is being amortized into interest expense concurrent with the hedged exposure.

Foreign Exchange Contracts

Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such as foreign purchases of materials and loan payments between subsidiaries.  The Company enters into such contracts for hedging purposes only.  The Company has designated certain of these currency contracts as hedges, and changes in the fair value of these contracts are recognized in other comprehensive income until the hedged items are recognized in earnings.  Hedge ineffectiveness, if any, associated with these contracts will be reported in net income.  At June 30, 2020 and 2019, the Company had outstanding forward contracts related to hedges of intercompany loans with net losses of $2.5 million and $3.1 million, respectively, which approximate the unrealized gains or losses on the related loans.  The contracts have maturity dates ranging from 2021 to 2024, which correspond to the related intercompany loans.  The notional amounts of these instruments, by currency in thousands, are as follows:

Currency	2020		2019
USD		287		55,015
Euro		5,750		5,750
SGD		64,696		-
Canadian		20,600		20,600

The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet at June 30, (in thousands):

	Asset Derivatives
	2020			2019
Derivative designated as	Balance			Balance
hedging instruments	Sheet			Sheet
	Line Item	Fair Value		Line Item	Fair Value
Interest rate swaps	Other Assets	$	-	Other Assets	$	52

	Liability Derivatives
	2020			2019
Derivative designated as	Balance			Balance
hedging instruments	Sheet			Sheet
	Line Item	Fair Value		Line Item	Fair Value
Interest rate swaps	Accrued Liabilities	$	6,667	Accrued Liabilities	$	1,432
Foreign exchange contracts	Accrued Liabilities		2,477	Accrued Liabilities		3,052
		$	9,144		$	4,484

The table below presents the amount of gain (loss) recognized in comprehensive income on our derivative financial instruments (effective portion) designated as hedging instruments and their classification within comprehensive income for the periods ended (in thousands):

	2020			2019			2018
Interest rate swaps	$	(7,098	)	$	1,703		$	1,367
Foreign exchange contracts		1,851			(3,279	)		1,174
	$	(5,247	)	$	(1,576	)	$	2,541

The table below presents the amount reclassified from accumulated other comprehensive income (loss) to net income for the periods ended (in thousands):

Details about Accumulated									Affected line item
Other Comprehensive									in the Statements
Income (Loss) Components	2020			2019			2018		of Operations
Interest rate swaps	$	547		$	(321	)	$	171	Interest expense
Foreign exchange contracts		(1,403	)		1,730			121	Other non-operating income
Net investment hedge		-			(285	)		-	Other non-operating income
	$	(856	)	$	1,124		$	292