NOTE 10 – DERIVATIVES

We are exposed to certain risks relating to our ongoing business operations. The primary risks managed by using derivative instruments are interest rate risk and foreign exchange rate risk. Accordingly, we have instituted interest rate and foreign currency hedging programs that are accounted for in accordance with ASC 815, "Derivatives and Hedging."

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Our interest rate hedging program is a cash flow hedge program designed to minimize interest rate volatility. We swap the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. We also employ an interest rate cap that compensates us if variable interest rates rise above a pre-determined rate. Our interest rate contracts are designated as hedging instruments.

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Our foreign currency hedging program is a cash flow hedge program designed to minimize foreign currency volatility related to the foreign exchange exposure related to intercompany debt obligations. We primarily utilize cross-currency swaps with maturities of no more than 12 months that are designated as hedging instruments.

We also enter into other economic hedges to mitigate foreign currency exchange risk and interest rate risk related to other intercompany transactions. These contracts are not designated as hedges in accordance with ASC 815.

The following table presents the notional amounts and fair values of our derivatives as of December 31, 2011 and June 30, 2011 (in thousands). All asset and liability amounts are reported in other current assets and other current liabilities.


	December 31, 2011					June 30, 2011
	Notional Amount		Asset (Liability)			Notional Amount		Asset (Liability)
Derivatives designated as hedging instruments under ASC 815
Interest rate contracts	$	175,000	$	(1,809	)	$	150,000	$	(1,176	)
Cross-currency swap contracts		25,694		(1,514	)		31,016		620

Total designated derivatives	$	200,694	$	(3,323	)	$	181,016	$	(556	)

Derivatives not designated as hedging instruments under ASC 815
Cross-currency interest rate swap contracts	$	44,422	$	(2,696	)	$	49,633	$	419
Foreign exchange contracts		67,130		(134	)		107,932		1,126

Total non-designated derivatives	$	111,552	$	(2,830	)	$	157,565	$	1,545


Total derivatives	$	312,246	$	(6,153	)	$	338,581	$	989

We record the effective portion of any change in the fair value of derivatives designated as hedging instruments under ASC 815 to other accumulated comprehensive income on the balance sheet, net of deferred taxes and any ineffective portion to miscellaneous income (expense) on the consolidated statements of income. The amounts recognized in other comprehensive income, net of taxes, are presented below (in thousands):


	Three Months Ended December 31,						Six Months Ended December 31,
	2011			2010			2011			2010
Derivatives designated as hedging instruments under ASC 815
Interest rate contracts	$	(4	)	$	734		$	(412	)	$	1,115
Cross-currency swap contracts		76			(2,194	)		(713	)		2,546

Total designated derivatives	$	72		$	(1,460	)	$	(1,125	)	$	3,661

Under certain circumstances, such as the occurrence of significant differences between actual cash receipts and forecasted cash receipts, the ASC 815 programs could be deemed ineffective. During the six months ended December 31, 2011 and 2010, there were no amounts recorded to reflect ineffective portions of any hedges. The estimated net amount of the existing losses that are expected to be reclassified into earnings within the next twelve months is $0.8 million.

The change in the fair value of derivatives not designated as hedging instruments under ASC 815 is recorded to miscellaneous (loss) income on the income statement. The amounts recognized are presented below (in thousands):


	Three Months Ended December 31,						Six Months Ended December 31,
	2011			2010			2011			2010
Derivatives not designated as hedging instruments under ASC 815
Cross-currency interest rate swap contracts	$	(950	)	$	(263	)	$	(3,115	)	$	2,289
Foreign exchange contracts		2,297			(2,741	)		(1,260	)		903

Total non-designated derivatives	$	1,347		$	(3,004	)	$	(4,375	)	$	3,192