DERIVATIVE INSTRUMENTS

9 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

The Company is exposed to foreign currency exchange fluctuations through its global operations, with manufacturing and distribution facilities in various countries around the world. The Company may reduce its exposure to fluctuations in the cash flows associated with changes in foreign exchange rates by creating offsetting positions through the use of derivative instruments. The Company expects that through hedging, any gain or loss on the derivative instruments would generally offset the expected increase or decrease in the value of the underlying firm commitments or forecasted transactions. During fiscal 2014, the Company launched a program to qualify derivatives for hedge accounting treatment. The Company began entering into derivatives for which hedge accounting treatment has been applied late in the second quarter of fiscal 2014 which the Company anticipates realizing in the Condensed Consolidated Statement of Operations in fiscal 2015. The Company also continued to use certain derivatives as economic hedges of foreign currency exposure on firm commitments and forecasted transactions. Although these derivatives were not designated for hedge accounting, the overall objective of mitigating foreign currency exposure is the same for all derivative instruments. The Company does not enter into derivative financial instruments for trading or speculative purposes, nor is the Company a party to leveraged derivatives.

For derivatives accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of specific underlying forecasted transactions, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company formally assesses both at inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. Any ineffective portion of a financial instrument's change in fair value is immediately recognized into earnings. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly effective hedge, the Company will discontinue hedge accounting for the affected derivative in the related period. Additionally, all of the master agreements governing the Company’s derivative contracts contain standard provisions that could trigger early termination of the contracts in certain circumstances which would require the Company to discontinue hedge accounting, including if the Company were to merge with another entity and the creditworthiness of the surviving entity were to be “materially weaker” than that of the Company prior to the merger. As of March 31, 2014, foreign currency forward contracts in net liability positions that contained credit-risk-related features were $4.0.

Quantitative Information

Derivatives are recognized on the balance sheet at their fair values. The following table presents the fair value of derivative instruments outstanding at March 31, 2014 and June 30, 2013:

	Asset					Liability
	Balance Sheet Classification	Fair Value				Balance Sheet Classification	Fair Value
		March 31, 2014		June 30, 2013			March 31, 2014		June 30, 2013
Derivatives designated as hedges:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	0.7	$	—	Accrued expenses and other current liabilities	$	2.9	$	—
Total derivatives designated as hedges		$	0.7	$	—		$	2.9	$	—
Derivatives not designated as hedges:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	2.7	$	0.6	Accrued expenses and other current liabilities	$	1.1	$	0.8
Total derivatives not designated as hedges		$	2.7	$	0.6		$	1.1	$	0.8
Total derivatives		$	3.4	$	0.6		$	4.0	$	0.8

The table below presents the gross amount of foreign exchange contract hedges recorded as assets and liabilities in Prepaid expenses and other current assets and Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheet, respectively, as of March 31, 2014:

										Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts Recognized			Gross Amounts Offset in the Condensed Consolidated Statement of Operations			Net Amount Presented in the Condensed Consolidated Balance Sheets			Financial Instruments		Cash Collateral Received		Net Amount
Assets	$	4.2		$	(0.8	)	$	3.4		$	—	$	—	$	3.4
Liabilities	$	(5.0	)	$	1.0		$	(4.0	)	$	—	$	—	$	(4.0	)

The table below presents the gross amount of foreign exchange contract hedges recorded as assets and liabilities in Prepaid expenses and other current assets and Accrued expenses and other current liabilities in the Consolidated Balance Sheet, respectively, as of June 30, 2013:

										Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Amounts Recognized			Gross Amounts Offset in the Consolidated Statement of Operations			Net Amount Presented in the Consolidated Balance Sheets			Financial Instruments		Cash Collateral Received		Net Amount
Assets	$	0.9		$	(0.3	)	$	0.6		$	—	$	—	$	0.6
Liabilities	$	(1.2	)	$	0.4		$	(0.8	)	$	—	$	—	$	(0.8	)

The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments during the three and nine months ended March 31, 2014 and 2013 is presented below:

	Gain (Loss) Recognized in Operations Three Months Ended March 31,					Condensed Consolidated Statements of Operations Classification of Gain (Loss) Recognized in Operations	Gain (Loss) Recognized in Operations Nine Months Ended March 31,					Condensed Consolidated Statements of Operations Classification of Gain (Loss) Recognized in Operations
	2014		2013				2014		2013
Foreign exchange forward contracts	$	2.7	$	(2.1	)	Interest expense, net	$	4.1	$	(1.5	)	Interest expense, net
Foreign exchange forward contracts	$	2.9	$	1.4		Cost of Sales	$	0.7	$	0.4		Cost of Sales

The Company enters into foreign currency forward contracts to hedge anticipated transactions for periods consistent with the Company’s identified exposures to minimize the effect of foreign exchange rate movements on revenues and costs and on the cash flows that the Company receives from foreign subsidiaries and third parties where there is a high probability that anticipated exposures will materialize. The foreign currency forward contracts entered into to hedge anticipated transactions have been designated as foreign currency cash-flow hedges and have varying maturities through the end of June 2015. Hedge effectiveness of foreign currency forward contracts is based on the forward-to-forward hypothetical derivative methodology and includes all changes in value.

The ineffective portion of foreign currency forward contracts is recorded in current-period earnings. For hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses accumulated in Other comprehensive income (loss) (“OCI”) are reclassified to earnings when the underlying forecasted transaction occurs. If it is no longer probable that the forecasted transaction will occur, then any gains or losses in AOCI are reclassified to current-period earnings. As of March 31, 2014, all of the Company’s foreign currency forward contracts designated as hedges were highly effective in all material respects. The accumulated loss on these derivative instruments in AOCI, net of tax, was $(1.9) and nil as of March 31, 2014 and June 30, 2013, respectively. The estimated net loss related to these effective hedges that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $(1.5). There were no amounts reclassified from AOCI into earnings during the three and nine months ended March 31, 2014.

As of March 31, 2014, the Company had foreign currency forward contracts designated as effective hedges in the amount of $322.9, which mature at various dates through June 2015. The foreign currencies of the counterparties in the hedged foreign currency forward contracts (notional value stated in U.S. dollars) are principally the British Pound ($106.0), Euro ($86.5), Australian Dollar ($52.0), Canadian Dollar ($47.7), Polish Zloty ($30.3), and Japanese Yen ($4.6). As of June 30, 2013, the Company had no foreign currency forward contracts designated as effective hedges.

As of March 31, 2014 and June 30, 2013, the Company had foreign currency forward contracts not designated as hedges with a notional value of $267.1 and $260.6, respectively, which mature at various dates through June 2014.