Derivative Instruments

9 Months Ended

Mar. 31, 2017

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments

Note 12. Derivative Instruments

The Company, from time to time, purchases foreign currency forward exchange contracts, primarily in Japanese Yen, that permit it to sell specified amounts of these foreign currencies expected to be received from its export sales for pre-established U.S. dollar amounts at specified dates. The Company enters into these contracts to limit transactional exposure to changes in currency exchange rates of export sales transactions in which settlement will occur in future periods and which otherwise would expose the Company, on the basis of its aggregate net cash flows in respective currencies, to foreign currency risk.

The Company has recorded the fair market value of these contracts in the Company’s Condensed Consolidated Financial Statements. These contracts had a total notional amount of $7.9 million and $9.2 million at March 31, 2017 and June 30, 2016, respectively. As of March 31, 2017, these forward contracts had expiration dates ranging from April 2017 through July 2017, with Japanese Yen denominations individually ranging from 100 million Yen to 400 million Yen. The Company does not account for these contracts as hedges as defined by U.S. GAAP, and records the change in the fair value of these contracts in Other expense (income), net in the Condensed Consolidated Statements of Earnings as they occur. The fair value measurement takes into consideration foreign currency rates and the current creditworthiness of the counterparties to these contracts, as applicable, and is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments and thus represents a Level 2 measurement. These contracts are recorded in Other accrued liabilities as of as of March 31, 2017 and June 30, 2016 in the Company’s Condensed Consolidated Balance Sheets. The fair value of these contracts decreased $1.3 million and increased $0.4 million for the three and nine months ended March 31, 2017, respectively.

During the month of March 2017, the Company entered into a $50.0 million forward contract that matured on March 31, 2017 to limit exposure to the Chinese Renminbi. Upon expiration of this contract, the Company recorded a $0.3 million gain in the Condensed Consolidated Statement of Earnings.