Derivative Instruments

6 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Interest Rate Swap:

We are subject to interest rate risk related to the revolving credit facility and we enter into interest rate swap agreements that are based on LIBOR to manage this exposure. The interest rate swap agreements are designated as cash flow hedges that qualify for hedge accounting under the hypothetical derivative method. Fair value adjustments are recorded as a component of Accumulated Other Comprehensive Income, net of tax (“AOCI”) in the Condensed Consolidated Balance Sheets. Balances in AOCI are reclassified into earnings when transactions related to the underlying risk are settled. As of December 31, 2021 we held interest rate swaps with notional values totaling $40.0 million and a weighted average LIBOR fixed rate of 0.834%. See Note 13 - Fair Value of Notes to Condensed Consolidated Financial Statements for information regarding the fair value of our interest rate swap.

At December 31, 2021, our interest rate swap was recorded in current assets and non-current assets at $0.1 million and $0.1 million, respectively.

The pre-tax balance of interest rate swap gains in AOCI as of December 31, 2021 was $0.2 million. See Note 10 - Accumulated Other Comprehensive Income of Notes to Condensed Consolidated Financial Statements for information regarding activity recorded as a component of AOCI during the three and six months ended December 31, 2021. As of December 31, 2021, we have $0.1 million of interest rate swap gains recorded in AOCI which are expected to be reclassified into earnings within the next twelve months.

Stock Warrants:

We hold a total investment of $2.0 million in a privately-held company, including $1.5 million in stock warrants. The investment in stock warrants is accounted for as a derivative instrument and is included in the Other Assets line of the Condensed Consolidated Balance Sheets. The stock warrants are convertible into equity shares of the privately-held company upon achieving certain milestones. The value of the stock warrants will fluctuate primarily in relation to the value of the privately-held company's underlying securities, either providing an appreciation in value or potentially expiring with no value. During the quarter ended December 31, 2021, the change in fair value of the stock warrants was not significant. See Note 13 - Fair Value of Notes to Condensed Consolidated Financial Statements for more information on the valuation of these securities.