Derivatives And Hedging

3 Months Ended

Sep. 30, 2012

Derivatives And Hedging [Abstract]

Derivatives And Hedging

(9)Derivative Instruments and Hedging Activities

We transact business in various foreign currencies, including a number of major European currencies as well as the Australian and Singapore dollars. We have significant foreign currency exposure through both our Australian and Singaporean manufacturing activities, and international sales operations.  We have established a foreign currency hedging program using purchased currency options and forward contracts to hedge foreign-currency-denominated financial assets, liabilities and manufacturing cash flows.  The terms of such foreign currency hedging contracts generally do not exceed three years.  The goal of this hedging program is to economically manage the financial impact of foreign currency exposures denominated in Euros, Australian and Singapore dollars.  Under this program, increases or decreases in our foreign currency denominated financial assets, liabilities, and firm commitments are partially offset by gains and losses on the hedging instruments.

We do not designate these foreign currency contracts as hedges.  We have determined our hedge program to be a non-effective hedge as defined under the FASB issued authoritative guidance.  All movements in the fair value of the foreign currency instruments are recorded within other income, net in our consolidated statements of income.  We do not enter into financial instruments for trading or speculative purposes.

We held foreign currency instruments with notional amounts totaling $395.8 million and $334.7 million at September 30, 2012 and June 30, 2012, respectively, to hedge foreign currency fluctuations.  These contracts mature at various dates prior to September 30, 2015.

The fair value and effect of derivative instruments on our condensed consolidated financial statements were as follows (in thousands):

	Asset Derivatives	September 30, 2012		Gain recognized in Income on Derivative
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	Fair Value	Location of gain recognized in Income on Derivative	Three Months Ended September 30, 2012
Foreign Exchange Contracts	Other Assets	$10,706	Other, net	$1,083

Net gain recognized, on foreign currency instruments, during the three months ended September 30, 2012 was $1.1 million.  Net loss recognized, on foreign currency instruments, during the three months ended September 30, 2011 was $5.8 million.  

We are exposed to credit-related losses in the event of non-performance by counter parties to financial instruments.  The credit exposure of foreign currency derivatives at September 30, 2012 and June 30, 2012 was $10.7  million and $14.6 million, respectively, which represents the positive fair value of our foreign currency derivatives.  These values are included in the current and non-current balances of other assets on the consolidated balance sheets.  We minimize counterparty credit riskby entering into derivative transactions with major financial institutions and we do not expect material losses as a result of default by our counterparties.