Fair Value Measurements (Notes)

9 Months Ended

Mar. 31, 2014

The Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

•Level 1—Valuation is based upon quoted prices for identical instruments traded in active markets.

•Level 2—Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

•Level 3—Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Securities with quotes that are based on actual trades or actionable bids and offers with a sufficient level of activity on or near the measurement date are classified as Level 1. Securities that are priced using quotes derived from implied values, indicative bids and offers, or a limited number of actual trades, or the same information for securities that are similar in many respects to those being valued, are classified as Level 2. If market information is not available for securities being valued, or materially-comparable securities, then those securities are classified as Level 3. In considering market information, management evaluates changes in liquidity, willingness of a broker to execute at the quoted price, the depth and consistency of prices from pricing services, and the existence of observable trades in the market.

Assets and liabilities measured and recorded at fair value on a recurring basis were as follows (in thousands):



March 31, 2014	Total		Level 1		Level 2		Level 3
Preferred stock(1)	$	21,571	$	17,016	$	4,555	$	—
Derivatives designated as cash flow hedges:
Coffee-related derivative assets	$	16,667	$	16,667	$	—	$	—
Derivatives not designated as accounting hedges:
Coffee-related derivative assets	$	3,100	$	3,100	$	—	$	—


June 30, 2013	Total		Level 1		Level 2		Level 3
Preferred stock(1)	$	20,542	$	15,738	$	4,804	$	—
Futures, options and other derivative assets(1)	$	4	$	—	$	4	$	—
Derivatives designated as cash flow hedges:
Coffee-related derivative liabilities	$	10,460	$	10,460	$	—	$	—
Derivatives not designated as accounting hedges:
Coffee-related derivative liabilities	$	565	$	565	$	—	$	—
Derivative liabilities — interest rate swap	$	25	$	—	$	25	$	—

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(1)	Included in "Short-term investments" on the consolidated balance sheets.

There were no significant transfers of securities between Level 1 and Level 2.

Effective December 1, 2012, the Company entered into an interest rate swap transaction utilizing a notional amount of $10.0 million and a maturity date of March 1, 2015. The Company entered into the swap transaction to effectively fix the future interest rate during the applicable period on a portion of its borrowings under the revolving credit facility. The swap transaction was intended to manage the Company's interest rate risk related to its revolving credit facility. The Company terminated the swap transaction on March 5, 2014.

The Company valued its interest rate swap using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of the interest rate swap. The analysis reflected the contractual terms of the interest rate swap, including the period to maturity, and used observable market-based inputs, including interest rate curves and implied volatilities.

Valuation of the interest rate swap transaction was based on proprietary curves that took into account both Level 1 and Level 2 inputs. The fair value of the interest rate swap was determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts were based on an expectation of future interest rates (forward curves). These forward curves were market-based, utilizing observable market data. Discount curves for present value purposes were constructed using rates representing estimated costs of funding swap positions for early terminations based on an appropriate observable discount rate.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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