We use derivative financial instruments, such as interest rate swap contracts, cross-currency swap contracts, and currency forward and option contracts, to manage interest rate and foreign currency exposures. Derivatives are recorded in the consolidated balance sheets at fair value. If a derivative is designated as a cash flow hedge or net investment hedge, then the change in the fair value of the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings. We have designated one intercompany loan as a net investment hedge, and any unrealized currency gains and losses on the loan are recorded in accumulated other comprehensive loss. Additionally, any ineffectiveness associated with an effective and designated hedge is recognized within accumulated other comprehensive loss.

We enter into interest rate swap contracts to manage variability in the amount of our known or expected cash payments related to a portion of our debt. Our objective in using interest rate swaps is to add stability to interest expense and to manage our exposure to interest rate movements. We designate our interest rate swaps as cash flow hedges. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Realized gains or losses from interest rate swaps are recorded in earnings as a component of interest expense, net. Amounts reported in accumulated other comprehensive loss

As of June 30, 2023, we estimate that $7,279 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending June 30, 2024. As of June 30, 2023, we had eleven effective outstanding interest rate swap contracts with aggregate notional amounts of $475,000, $140,000, and $60,000 that were indexed to USD LIBOR, Term SOFR, and Daily SOFR, respectively. The transition relief guidance from ASC 848 was applied to designate the SOFR swap contracts for hedge accounting despite the benchmark rate mismatch. After USD LIBOR sunsets on June 30, 2023, all contracts indexed to USD LIBOR will convert to either Term or Daily SOFR with effective dates in July 2023.

(1) Based on contracts outstanding as of June 30, 2023, the notional value of our contracted interest rate swaps accruing interest will fluctuate between $215,000 and $380,000 through April 2028 based on layered start dates and maturities.

We execute cross-currency swap contracts designated as cash flow hedges or net investment hedges. Cross-currency swaps involve an initial receipt of the notional amount in the hedged currency in exchange for our reporting currency based on a contracted exchange rate. Subsequently, we receive fixed rate payments in our reporting currency in exchange for fixed rate payments in the hedged currency over the life of the contract. At maturity, the final exchange involves the receipt of our reporting currency in exchange for the notional amount in the hedged currency.

Cross-currency swap contracts designated as cash flow hedges are executed to mitigate our currency exposure to the interest receipts as well as the principal remeasurement and repayment associated with certain intercompany loans denominated in a currency other than our reporting currency, the U.S. dollar. As of June 30, 2023, we had one outstanding cross-currency swap contract designated as a cash flow hedge with a total notional amount of $58,478, maturing during June 2024. We entered into the cross-currency swap contract to hedge the risk of changes in one Euro-denominated intercompany loan entered into with one of our consolidated subsidiaries that has the Euro as its functional currency.

Amounts reported in accumulated other comprehensive loss will be reclassified to other income (expense), net as interest payments are accrued or paid, and upon remeasuring the intercompany loan. As of June 30, 2023, we estimate that $839 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending June 30, 2024.

We execute currency forward and option contracts in order to mitigate our exposure to fluctuations in various currencies against our reporting currency, the U.S. dollar. These contracts or intercompany loans may be designated as hedges to mitigate the risk of changes in the U.S. dollar equivalent value of a portion of our net investment in consolidated subsidiaries that have the Euro as their functional currency. Amounts reported in accumulated other comprehensive loss are recognized as a component of our cumulative translation adjustment.

We have elected to not apply hedge accounting for all other currency forward and option contracts. During the years ended June 30, 2023, 2022, and 2021, we experienced volatility within other income (expense), net, in our consolidated statements of operations from unrealized gains and losses on the mark-to-market of outstanding

currency forward and option contracts. We expect this volatility to continue in future periods for contracts for which we do not apply hedge accounting. Additionally, since our hedging objectives may be targeted at non-GAAP financial metrics that exclude non-cash items such as depreciation and amortization, we may experience increased, not decreased, volatility in our GAAP results as a result of our currency hedging program.

In most cases, we enter into these currency derivative contracts, which do not apply hedge accounting, in order to address the risk for certain currencies where we have a net exposure to adjusted EBITDA, a non-GAAP financial metric. Adjusted EBITDA exposures are our focus for the majority of our mark-to-market currency forward and option contracts because a similar metric is referenced within the debt covenants of our amended and restated senior secured credit agreement (refer to Note 10 for additional information about this agreement). Our most significant net currency exposures by volume are the Euro and the British Pound (GBP). Our adjusted EBITDA hedging approach results in addressing nearly all of our forecasted Euro and GBP net exposures for the upcoming twelve months, with a declining hedged percentage out to twenty-four months. For certain other currencies with a smaller net impact, we hedge nearly all of our forecasted net exposures for the upcoming six months, with a declining hedge percentage out to fifteen months.

As of June 30, 2023, we had the following outstanding currency derivative contracts that were not designated for hedge accounting and were primarily used to hedge fluctuations in the U.S. dollar value of forecasted transactions or balances denominated in Australian Dollar, GBP, Canadian Dollar, Czech Koruna, Danish Krone, Euro, Indian Rupee, Mexican Peso, New Zealand Dollar, Norwegian Krone, Philippine Peso, Swiss Franc and Swedish Krona:

The table below presents the fair value of our derivative financial instruments as well as their classification on the balance sheet as of June 30, 2023 and June 30, 2022. Our derivative asset and liability balances fluctuate with interest rate and currency exchange rate volatility.


	June 30, 2022
	Asset Derivatives							Liability Derivatives
	Balance Sheet line item	Gross amounts of recognized assets		Gross amount offset in Consolidated Balance Sheet		Net amount		Balance Sheet line item	Gross amounts of recognized liabilities		Gross amount offset in Consolidated Balance Sheet		Net amount
Derivatives designated as hedging instruments
Derivatives in cash flow hedging relationships
Interest rate swaps	Other current assets / other assets	$	14,336	$	—	$	14,336	Other current liabilities / other liabilities	$	—	$	—	$	—
Cross-currency swaps	Other assets	—		—		—		Other liabilities	(446)		—		$	(446)



Total derivatives designated as hedging instruments		$	14,336	$	—	$	14,336		$	(446)	$	—	$	(446)

Derivatives not designated as hedging instruments


Currency forward contracts	Other current assets / other assets	$	24,440	$	(3,802)	$	20,638	Other current liabilities / other liabilities	$	(505)	$	—	$	(505)
Currency option contracts	Other current assets / other assets	10,612		(1)		10,611		Other current liabilities / other liabilities	(9)		—		(9)
Total derivatives not designated as hedging instruments		$	35,052	$	(3,803)	$	31,249		$	(514)	$	—	$	(514)


	Year Ended June 30,
		2023		2022		2021
Derivatives in cash flow hedging relationships
Interest rate swaps		$	11,151	$	25,511	$	3,340
Cross-currency swaps		(1,160)		(22,698)		6,996
Derivatives in net investment hedging relationships

Intercompany loan		(8,384)		49,225		7,518
Currency forward contracts		—		13,622		(19,052)
Total		$	1,607	$	65,660	$	(1,198)


		Amount of Net Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income						Affected line item in the Statement of Operations
	Year Ended June 30,
		2023		2022		2021
Derivatives in cash flow hedging relationships
Interest rate swaps		$	(4,851)	$	9,998	$	6,967	Interest expense, net
Cross-currency swaps		903		18,286		(10,950)		Other income (expense), net
Total before income tax		(3,948)		28,284		(3,983)		(Loss) income before income taxes
Income tax		1,075		(2,087)		(106)		Income tax expense
Total		$	(2,873)	$	26,197	$	(4,089)

The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the years ended June 30, 2023, 2022, and 2021 for derivative instruments for which we did not elect hedge accounting and de-designated derivative financial instruments that did not qualify as hedging instruments.


		Amount of Gain (Loss) Recognized in Net Loss						Affected line item in the Statement of Operations
	Year Ended June 30,
		2023		2022		2021
Currency contracts		$	3,311	$	51,784	$	(24,235)	Other income (expense), net
Interest rate swaps		—		6,364		3,507		Other income (expense), net
Total		$	3,311	$	58,148	$	(20,728)