XML 29 R19.htm IDEA: XBRL DOCUMENT v3.22.0.1
Derivative Instruments
 6 Months Ended
Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
Cash Flow Hedges
Interest Rate Swap Agreements
We utilize interest rate swap agreements to hedge our exposure to interest rate risk. At December 31, 2021, we had one outstanding interest rate swap agreement with a notional value of $80 million. The notional value of our interest rate swap agreement is expected to match the corresponding principal amount of a portion of our borrowings under the Credit Facility.
The $80 million notional value agreement was effective as of December 1, 2021 and expires on July 16, 2023. During this period, the notional amount will have a fixed interest rate of 2.125% and Bank of America, N.A., as counterparty to the agreement, will pay us interest at a floating rate based on the 1 month USD-LIBOR-BBA swap rate on the notional amount. Interest payments will be made monthly on a net settlement basis.
We had a $100 million notional value agreement which expired on December 1, 2021. From December 1, 2017 through December 1, 2021, the notional amount had a fixed interest rate of 1.9275% and Citizens Bank, National Association, as counterparty to the agreement, paid us interest at a floating rate based on the 1 month USD-LIBOR-BBA swap rate on the notional amount. Interest payments were made quarterly on a net settlement basis.
We designated the interest rate swaps as hedging instruments and they qualified for hedge accounting upon inception and at December 31, 2021. To continue to qualify for hedge accounting, the instruments must retain a “highly effective” ability to hedge interest rate risk for borrowings under the Credit Facility. We are required to test hedge effectiveness at the end of each financial reporting period. If a derivative qualifies for hedge accounting, changes in fair value of the hedge instrument are recognized in accumulated other comprehensive income (loss) (AOCI) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The reclassification into earnings is recorded as a component of our interest expense within other expense, net. If the instrument were to lose some or all of its hedge effectiveness, changes in fair value for the “ineffective” portion of the instrument would be recorded immediately in earnings.
The fair values of the interest rate swaps and their respective locations in our consolidated balance sheets at December 31, 2021 and June 30, 2021 were as follows:
DescriptionBalance Sheet LocationDecember 31, 2021June 30, 2021
Derivative interest rate swaps(in thousands)
Short-term derivative liabilityAccrued expenses and other current liabilities$1,255 $1,564 
Long-term derivative liabilityOther liabilities$536 $1,550 
The following table presents the effect of the derivative interest rate swaps in our consolidated statement of comprehensive loss for the six months ended December 31, 2021 and 2020.
Gain (Loss) in AOCI June 30, 2021Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI December 31, 2021
(in thousands)
Derivative interest rate swap$(3,114)$403 $920 $(1,791)
Gain (Loss) in AOCI June 30, 2020Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI December 31, 2020
(in thousands)
Derivative interest rate swap$(5,079)$7 $905 $(4,167)
——————
(1)    Recorded as interest income (expense) within other expense, net in our unaudited consolidated statements of comprehensive income (loss).
During the three and six months ended December 31, 2021, we concluded that no portion of the hedges was ineffective.
We expect to reclassify approximately $1.3 million of this unrealized loss from AOCI to earnings over the next twelve months.