Derivative Instruments

6 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company may enter into foreign currency forward or option contracts (derivative contracts). Certain of these derivative contracts are designated as cash flow hedges of forecasted sales (Designated Derivative Contracts). The Company may also enter into derivative contracts that are not designated as cash flow hedges (Non-Designated Derivative Contracts), to offset a portion of anticipated gains and losses on certain intercompany balances until the expected time of repayment.

The after-tax unrealized gains or losses from changes in the fair value of Designated Derivative Contracts are recognized as a component of AOCL and are reclassified to earnings in the condensed consolidated statements of comprehensive income in the same period or periods as the related net sales are recorded. The Company includes all hedge components in its assessment of effectiveness for its derivative contracts. When it is probable that a forecasted transaction will not occur, the Company discontinues hedge accounting and the accumulated gains or losses in other comprehensive income or loss (OCI) related to the hedging relationship are immediately recorded in earnings in the condensed consolidated statements of comprehensive income.

As of September 30, 2019, the Company had the following derivative contracts recorded at fair value in the condensed consolidated balance sheets:



	Designated Derivative Contracts		Non-Designated Derivative Contracts			Total
Notional value	$	48,528	$	42,825		$	91,353
Fair value recorded in other current assets	1,557		317			1,874
Fair value recorded in other accrued expenses	—		(172		)	(172		)

As of March 31, 2019, the Company had no outstanding derivative contracts.

As of September 30, 2019, the Company's outstanding derivative contracts were held by a total of six counterparties, all with various maturity dates within the next six months.

The following table summarizes the effect of Designated Derivative Contracts:



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Amount of gain recognized in OCI	$	2,190	$	588	$	1,773	$	7,358
Amount of gain reclassified from AOCL into net sales	216		2,166		216		2,166
Amount of gain excluded from effectiveness testing recognized in SG&A expenses*	—		634		—		1,480

*Amounts presented for the three and six months ended September 30, 2018 were recognized under legacy US GAAP. Beginning April 1, 2019, under the new hedging standard, these amounts are now recognized as a component of AOCL and were reclassified into earnings during the three and six months ended September 30, 2019.

Amounts of income tax effects recorded in the condensed consolidated statements of comprehensive income for changes in AOCL for unrealized gains or losses for Designated Derivative Contracts were as follows:



	Three Months Ended September 30,					Six Months Ended September 30,
	2019		2018			2019		2018
Income tax expense (benefit)	$	477	$	(381	)	$	377	$	1,066

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



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Amount of gain recognized in SG&A expenses	$	502	$	250	$	146	$	737

The non-performance risk of the Company and the counterparties did not have a material impact on the fair value of its derivative contracts. As of September 30, 2019, the amount of unrealized gains on derivative contracts recognized in AOCL is expected to be reclassified into income within the next nine months. Refer to Note 10, “Stockholders' Equity,” for further information.

Subsequent to September 30, 2019 through October 31, 2019, the Company entered into a Non-Designated Derivative Contract with a notional value totaling $6,427, which is expected to mature over the next two months, and no additional Designated Derivative Contracts. As of October 31, 2019, the Company’s outstanding hedging contracts were held by an aggregate of six counterparties.