Derivative Instruments and Hedging Activities

12 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

As part of our financial risk management program, we use certain derivative financial instruments. See Note 2 for discussion on our derivative instruments and hedging activities policy.

The fair value of derivatives designated and not designated as hedging instruments in the consolidated balance sheet are as follows:

(in thousands)	2014			2013
Derivatives designated as hedging instruments
Other current assets - range forward contracts	$	184		$	658
Other current liabilities - range forward contracts	(6		)	(522		)
Other assets - range forward contracts	42			69
Total derivatives designated as hedging instruments	220			205
Derivatives not designated as hedging instruments
Other current assets - currency forward contracts	27			48
Other current liabilities - currency forward contracts	(1,047		)	(8		)
Total derivatives not designated as hedging instruments	(1,020		)	40
Total derivatives	$	(800	)	$	245

Certain currency forward contracts that hedge significant cross-border intercompany loans are considered as other derivatives and therefore do not qualify for hedge accounting. These contracts are recorded at fair value in the consolidated balance sheet, with the offset to other expense (income), net. Losses (gains) related to derivatives not designated as hedging instruments have been recognized as follows:

(in thousands)	2014		2013		2012
Other expense (income), net - currency forward contracts	$	1,057	$	1,210	$	(1,149	)

FAIR VALUE HEDGES

Fixed-to-floating interest rate swap contracts, designated as fair value hedges, are entered into from time to time to hedge our exposure to fair value fluctuations on a portion of our fixed rate debt. We had no such contracts outstanding at June 30, 2014 and June 30, 2013.

In February 2009 we terminated interest rate swap contracts to convert $200.0 million of our fixed rate debt to floating rate debt. These contracts were originally set to mature in June 2012. This gain was amortized as a component of interest expense over the remaining term of the related debt using the effective interest rate method. The gain was fully amortized as of June 30, 2012. During the year ended June 30, 2012, $5.9 million was recognized as a reduction in interest expense.

CASH FLOW HEDGES

Currency forward contracts and range forward contracts (a transaction where both a put option is purchased and a call option is sold) are designated as cash flow hedges and hedge anticipated cash flows from cross-border intercompany sales of products and services. Gains and losses realized on these contracts at maturity are recorded in accumulated other comprehensive (loss) income, and are recognized as a component of other expense (income), net when the underlying sale of products or services is recognized into earnings. The notional amount of the contracts translated into U.S. dollars at June 30, 2014 and 2013 was $91.1 million and $102.2 million, respectively. The time value component of the fair value of range forward contracts is excluded from the assessment of hedge effectiveness. Assuming the market rates remain constant with the rates at June 30, 2014, we expect to recognize into earnings in the next 12 months $0.1 million of losses on outstanding derivatives.

Floating-to-fixed interest rate swap contracts, designated as cash flow hedges, are entered into from time to time to hedge our exposure to interest rate changes on a portion of our floating rate debt. These interest rate swap contracts convert a portion of our floating rate debt to fixed rate debt. We record the fair value of these contracts as an asset or a liability, as applicable, in the balance sheet, with the offset to accumulated other comprehensive (loss) income, net of tax. We had no such contracts outstanding at June 30, 2014 or 2013, respectively.

In February 2012, we settled forward starting interest rate swap contracts to convert $150.0 million of our floating rate debt to fixed rate debt. Upon settlement, we made a cash payment of $22.4 million. The loss is being amortized as a component of interest expense over the term of the related debt using the effective interest rate method. During the year ended June 30, 2014 and 2013, $1.9 million and $1.9 million was recognized as interest expense, respectively.

The following represents losses related to cash flow hedges:

(in thousands)	2014			2013			2012
Losses recognized in other comprehensive loss, net	$	(702	)	$	(611	)	$	(11,165	)
Losses reclassified from accumulated other comprehensive loss into other expense (income), net	$	1,399		$	1,116		$	270

No portion of the gains or losses recognized in earnings was due to ineffectiveness and no amounts were excluded from our effectiveness testing for the years ended June 30, 2014, 2013 and 2012.