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Derivative Instruments
6 Months Ended
Dec. 31, 2016
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 1 to the consolidated financial statements in the 2016 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, 2016 and June 30, 2016:
(In thousands)
 
December 31, 2016
 
June 30, 2016
Derivative instruments designated as cash flow hedges:
 
 
 
 
  Long coffee pounds
 
17,250

 
32,550

Derivative instruments not designated as cash flow hedges:
 
 
 
 
  Long coffee pounds
 
1,658

 
1,618

  Less: Short coffee pounds
 

 
(188
)
      Total
 
18,908

 
33,980


Coffee-related derivative instruments designated as cash flow hedges outstanding as of December 31, 2016 will expire within 12 months.

Effect of Derivative Instruments on the Financial Statements
Balance Sheets
Fair values of derivative instruments on the Company's condensed consolidated balance sheets:
 
 
Derivative Instruments
Designated as Cash Flow Hedges
 
Derivative Instruments Not Designated as Accounting Hedges
 
 
December 31, 2016
 
June 30, 2016
 
December 31, 2016
 
June 30, 2016
(In thousands)
 
 
 
 
 
 
 
 
Financial Statement Location:
 
 
 
 
 
 
 
 
Short-term derivative assets:
 
 
 
 
 
 
 
 
Coffee-related derivative instruments
 
$
1,118

 
$
3,771

 
$
24

 
$
183

Long-term derivative assets(1):
 
 
 
 
 
 
 
 
Coffee-related derivative instruments
 
$

 
$
2,575

 
$

 
$
57

Short-term derivative liabilities:
 
 
 
 
 
 
 
 
Coffee-related derivative instruments
 
$
440

 
$

 
$
1,139

 
$


________________
(1) Included in "Other assets" on the Company's condensed consolidated balance sheets.

Statements of Operations
The following table presents pretax net gains and losses for the Company's coffee-related derivative instruments designated as cash flow hedges, as recognized in accumulated other comprehensive income (loss) “AOCI,” “Cost of goods sold” and “Other, net”:
 
 
Three Months Ended December 31,
 
Six Months Ended December 31,
 
Financial Statement Classification
(In thousands)
 
2016
 
2015
 
2016
 
2015
 
Net (losses) gains recognized in accumulated other comprehensive income (loss) (effective portion)
 
$
(2,943
)
 
$
310

 
$
(2,217
)
 
$
(4,330
)
 
AOCI
Net gains (losses) recognized in earnings (effective portion)
 
$
215

 
$
(3,859
)
 
$
(250
)
 
$
(8,827
)
 
Costs of goods sold
Net losses recognized in earnings (ineffective portion)
 
$
(41
)
 
$
(128
)
 
$
(28
)
 
$
(484
)
 
Other, net
For the three and six months ended December 31, 2016 and 2015, there were no gains or losses recognized in earnings as a result of excluding amounts from the assessment of hedge effectiveness or as a result of reclassifications to earnings following the discontinuance of any cash flow hedges.
Gains and losses on derivative instruments not designated as accounting hedges are included in “Other, net” in the Company's condensed consolidated statements of operations and in “Net losses on derivative instruments and investments” in the Company's condensed 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)
 
2016
 
2015
 
2016
 
2015
Net (losses) gains on coffee-related derivative instruments
 
$
(1,204
)
 
$
32

 
$
(1,240
)
 
$
(695
)
Net (losses) gains on investments
 
(1,320
)
 
265

 
(1,092
)
 
118

     Net (losses) gains on derivative instruments and investments(1)
 
(2,524
)
 
297

 
(2,332
)
 
(577
)
     Other gains (losses), net
 
201

 

 
200

 
(1
)
             Other, net
 
$
(2,323
)
 
$
297

 
$
(2,132
)
 
$
(578
)

___________
(1) Excludes net losses and net gains 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, 2016 and 2015.

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, the Company maintains accounts with its brokers to facilitate financial derivative transactions in support of its risk management activities. Based on the value of the Company’s positions in these accounts and the associated margin requirements, the Company may be required to deposit cash into these broker accounts.
The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions as of the reporting dates indicated:
(In thousands)
 
 
 
Gross Amount Reported on Balance Sheet
 
Netting Adjustments
 
Cash Collateral Posted
 
Net Exposure
December 31, 2016
 
Derivative Assets
 
$
1,142

 
$
(1,057
)
 
$

 
$
85

 
 
Derivative Liabilities
 
$
1,579

 
$
(1,057
)
 
$

 
$
522

June 30, 2016
 
Derivative Assets
 
$
6,586

 
$

 
$

 
$
6,586


Cash Flow Hedges
Changes in the fair value of the Company's coffee-related derivative instruments designated as cash flow hedges, to the extent effective, are deferred in AOCI and 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, 2016, $2.6 million of net gains on coffee-related derivative instruments designated as cash flow hedges 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, 2016. Due to the volatile nature of commodity prices, actual gains or losses realized within the next twelve months will likely differ from these values.