Foreign Currency Exchange Rate Contracts and Hedging

Certain of the Company's foreign currency exchange rate forward contracts are designated cash flow hedges of forecasted sales (Designated Derivative Contracts) and are subject to foreign currency exchange rate risk. These contracts allow the Company to sell Euros and British Pounds in exchange for US dollars at specified contract rates. Forward contracts are used to hedge forecasted sales over specific quarters.

The Company may also enter into foreign currency exchange rate contracts that are not designated as hedging instruments (Non-Designated Derivative Contracts), and these contracts are generally entered into to offset the anticipated gains and losses on certain intercompany balances until the expected time of repayment.

The fair value of the notional amount of both the Designated and Non-Designated Derivative Contracts are recorded in other current assets or other accrued expenses in the condensed consolidated balance sheets. Changes in the fair value of Designated Derivative Contracts are recognized as a component of accumulated other comprehensive income (loss) (AOCI) within stockholders' equity, and are recognized in earnings in the condensed consolidated statements of comprehensive income during the period which approximates the time the corresponding third-party sales occur.

As of December 31, 2017, the Company had a total notional value of $62,549 for foreign currency exchange rate forward contracts, which included the following:



	Designated Derivative Contracts			Non-Designated Derivative Contracts
Notional value	$	24,347		$	38,202
Fair value recorded in other current assets	—			130
Fair value recorded in other accrued expenses	(1,827		)	(394		)

As of December 31, 2017, the Company had Designated Derivative Contracts with two counterparties and Non-Designated Derivative Contracts with five counterparties, all with various maturity dates within the next three months. During the three and nine months ended December 31, 2017, the Company settled Designated Derivative Contracts with a notional value totaling $50,997 and $83,807, respectively, that had been entered into during the fiscal year ended March 31, 2017. During the nine months ended December 31, 2017, the Company entered into and settled Designated Derivative and Non-Designated Contracts with a total notional value of $13,471 and $42,344, respectively.

The non-performance risk of the Company and the counterparties did not have a material impact on the fair value of the derivative instruments. During the three and nine months ended December 31, 2017, the Designated Derivative Contracts remained effective. The effective portion of the gain or loss on a designated derivative instrument is recognized in AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of December 31, 2017, the amount of unrealized losses on foreign currency exchange rate hedges recognized in AOCI (refer to Note 10, "Accumulated Other Comprehensive Loss," for additional information) is expected to be reclassified into income within the next six months.

The following table summarizes the effect of Designated Derivative Contracts:



	Three Months Ended December 31,
	2017			2016
Amount of gain recognized in other comprehensive income (loss) on derivative instruments (effective portion)	$	108		$	2,054
Location of amount reclassified from accumulated other comprehensive loss into income (effective portion)	Net Sales			Net Sales
Amount of (loss) gain reclassified from accumulated other comprehensive loss into income (effective portion)	$	(3,914	)	$	4,294
Location of amount excluded from effectiveness testing	Selling, general and administrative expenses			Selling, general and administrative expenses
Amount of gain excluded from effectiveness testing	$	273		$	142



	Nine Months Ended December 31,
	2017			2016
Amount of (loss) gain recognized in other comprehensive income (loss) on derivative instruments (effective portion)	$	(9,682	)	$	6,957
Location of amount reclassified from accumulated other comprehensive loss into income (effective portion)	Net Sales			Net Sales
Amount of (loss) gain reclassified from accumulated other comprehensive loss into income (effective portion)	$	(6,197	)	$	5,970
Location of amount excluded from effectiveness testing	Selling, general and administrative expenses			Selling, general and administrative expenses
Amount of gain excluded from effectiveness testing	$	1,045		$	497

The following table summarizes the effect of Non-Designated Derivative Contracts:



	Three Months Ended December 31,
	2017		2016
Location of amount recognized in income on derivative instruments	Selling, general and administrative expenses		Selling, general and administrative expenses
Amount of gain recognized in income on derivative instruments	$	211	$	4,038



	Nine Months Ended December 31,
	2017			2016
Location of amount recognized in income on derivative instruments	Selling, general and administrative expenses			Selling, general and administrative expenses
Amount of (loss) gain recognized in income on derivative instruments	$	(2,455	)	$	3,157

Subsequent to December 31, 2017, the Company entered into Designated Derivative Contracts with a notional value totaling $90,091, which are expected to mature over the next 15 months, and no Non-Designated Derivative Contracts. At February 9, 2018, the Company's outstanding hedging contracts were held by an aggregate of six counterparties.