Derivatives

6 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

9.      Derivatives

We monitor our exposure to foreign currency exchange rates and use derivatives (currency option contracts) to manage certain of these risks. These derivatives generally have an expiration/maturity of two years or less and are intended to hedge cash flows related to the purchase of inventory. 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). We record the portion of the changes in the value of the derivative, related to a hedged asset or liability (the effective portion), in accumulated other comprehensive income (loss). As the hedged item is sold, we recognize the gain or loss recorded in accumulated other comprehensive income (loss) to the consolidated statements of operations on the same line where the hedged item is charged when released/sold. We immediately recognize in the consolidated statements of operations in the same line as the hedged item, the portion of the changes in fair value of derivatives used as cash flow hedges that is not offset by changes in the expected cash flows related to a recognized asset or liability (the ineffective portion).

We routinely assess whether the derivatives used to hedge transactions are effective. If we determine that 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.”

The following table details the Company’s outstanding derivatives that are designated and effective as cash flow hedges as of December 31, 2016:

Instrument	Hedge	Notional  Amount at  December 31,  2016	Fair value as of
			December 31,  2016			June 30,  2016
Options	Brazilian Real calls	R$78,000		$	2,982		$	3,027
Options	Brazilian Real puts	R$78,000		$	(23)		$	(372)

The fair values at December 31, 2016, are unrealized and will fluctuate based on future exchange rates until the derivative contracts mature. Other comprehensive income (loss) for the three and six months ended December 31, 2016, included $270 and $304, respectively, of net unrecognized gains related to these contracts. Accumulated other comprehensive income (loss) at December 31, 2016, included $2,959 of net unrecognized gains on derivative instruments; we estimate that $362 of those gains will be recognized in earnings within the next twelve months. At June 30, 2016, realized losses of $1,528 related to matured contracts were recorded as a component of inventory. We recognized $393 and $1,528 of these losses in cost of goods sold during the three and six months ended December 31, 2016, respectively. We recognize gains (losses) related to these derivative instruments as a component of cost of goods sold at the time the hedged item is sold.