Derivatives

6 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

9.     Derivatives

We monitor our exposure to foreign currency exchange rates and interest rates and from time-to-time use derivatives to manage certain of these risks. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). All changes in the fair value of a highly effective cash flow hedge are recorded as an asset or liability with a corresponding amount recorded in accumulated other comprehensive income (loss).

We routinely assess whether the derivatives used to hedge transactions are effective. If we determine a derivative ceases to be an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.

We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see “—Fair Value Measurements.”

We entered into an interest rate swap agreement on $150,000 of notional principal that effectively converts the floating LIBOR or base rate portion of our interest obligation on that amount of debt, to a fixed interest rate of 1.8325% plus the applicable rate. The agreement matures concurrent with the Credit Agreement. The forecasted transactions are probable of occurring, and the interest rate swap has been designated as a highly effective cash flow hedge.

We entered into foreign currency option contracts to hedge cash flows related to monthly inventory purchases. The individual option contracts mature monthly through June 2020. The forecasted inventory purchases are probable of occurring and the individual option contracts were designated as highly effective cash flow hedges.

The following table summarizes the outstanding derivatives that are designated and effective as cash flow hedges as of December 31, 2018:

Instrument	Hedge	Notional  Amount at  December 31,  2018	Consolidated  Balance Sheet		Fair value as of
					December 31,  2018			June 30,  2018
Options	Brazilian Real calls	R$75,000		(1)		$	551		$	71
Options	Brazilian Real puts	R$75,000		(1)		$	(146)		$	—
Swap	Interest rate swap	$150,000	Other assets			$	2,972		$	5,078

(1)     We record the net fair values of our outstanding foreign currency option contracts within the respective balance sheet line item based on the net financial position and maturity date of the individual contracts as of the balance sheet date. The net fair values of  $405 and $71 were included in other current assets as of December 31, 2018 and June 30, 2018, respectively.

The following tables show the effects of derivatives on the consolidated statements of operations and other comprehensive income for the three and six months ended December 31, 2018 and 2017.

For the Three Months Ended December 31
Instrument	Hedge	Gain (Loss) recorded in OCI						Gain (Loss) recognized in  consolidated statements of operations							Consolidated Statement  of Operations Line  Item Total
		2018			2017			Consolidated  Statement  of Operations	2018			2017			2018			2017
Options	Brazilian Real puts and calls		$	513		$	(1,781)	Cost of goods sold		$	—		$	517		$	149,579		$	138,957
Swap	Interest rate swap		$	(2,756)		$	1,505	Interest expense, net		$	—		$	—		$	3,015		$	3,050

For the Six Months Ended December 31
Instrument	Hedge	Gain (Loss) recorded in OCI						Gain (Loss) recognized in  consolidated statements of operations							Consolidated Statement  of Operations Line  Item Total
		2018			2017			Consolidated  Statement  of Operations	2018			2017			2018			2017
Options	Brazilian Real puts and calls		$	404		$	(2,686)	Cost of goods sold		$	1,084		$	703		$	283,927		$	268,987
Swap	Interest rate swap		$	(2,106)		$	1,788	Interest expense, net		$	—		$	—		$	5,798		$	6,168

We recognize gains (losses) related to these foreign currency derivatives as a component of cost of goods sold at the time the hedged item is sold. Realized net gains of $1,084 related to matured contracts were recorded as a component of inventory as of June 30, 2018 and were fully recognized as an offset to costs of goods sold during the three months ended September 30, 2018.