Note 10 - Derivative Financial Instruments |
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| Derivative Instruments and Hedging Activities Disclosure [Text Block] |
10) Derivative Financial Instruments
Information about the Company’s derivative financial instruments is as follows:
Interest Rate Swaps
From time to time as dictated by market opportunities, the Company enters into interest rate swap agreements designed to manage exposure to interest rates on the Company’s variable rate indebtedness. The Company recognizes all derivatives on its consolidated balance sheets at fair value. The Company designates its interest rate swap agreements, including those that may be forward-dated, as cash flow hedges, and changes in the fair value of the swaps are recognized in accumulated other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps is reported in earnings within interest expense.
The Company’s effective swap agreements convert the base borrowing rate on $225 million of debt due under our Facility from a variable rate equal to 1 month Secured Overnight Financing Rate (SOFR) to a weighted average fixed rate of 3.48% at March 31, 2026. The fair value of the swaps, recognized in accumulated other comprehensive loss, is as follows (in thousands, except percentages):
The Company reported no losses for the three and nine months ended March 31, 2026, as a result of hedge ineffectiveness. Future changes in these swap arrangements, including termination of the agreements, may result in a reclassification of any gain or loss reported in accumulated other comprehensive loss into earnings as an adjustment to interest expense. Accumulated other comprehensive loss related to these instruments is being amortized into interest expense concurrent with the hedged exposure.
Foreign Exchange Contracts
Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such as collections from customers and loan payments between subsidiaries. The Company enters into such contracts for hedging purposes only. At March 31, 2026 and June 30, 2025, the Company had the following outstanding forward contract related to hedge of intercompany loans. The contract matures in April 2026.
The notional amounts of the Company’s forward contracts are as follows (in thousands):
The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet (in thousands):
The table below presents the amount reclassified from accumulated other comprehensive loss to net income for the periods ended (in thousands):
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