Derivative Instruments

9 Months Ended

Dec. 31, 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 net sales in the condensed consolidated statements of comprehensive income in the same period or periods as the related 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 AOCL related to the hedging relationship are immediately recorded in other comprehensive income or loss (OCI) in the condensed consolidated statements of comprehensive income.

As of December 31, 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	$	17,191	$	14,037	$	31,228
Fair value recorded in other current assets	273		165		438

As of December 31, 2019, the Company's outstanding derivative contracts were held by a total of four counterparties, all with various maturity dates within the next three months. As of March 31, 2019, the Company had no outstanding derivative contracts.

The following table summarizes the effect of Designated Derivative Contracts:



	Three Months Ended December 31,					Nine Months Ended December 31,
	2019			2018		2019		2018
(Loss) gain recognized in OCI	$	(451	)	$	998	$	1,322	$	8,356
Gain reclassified from AOCL into net sales	833			5,127		1,049		7,293
Gain excluded from effectiveness testing recognized in SG&A expenses*	—			363		—		1,843

*Amounts presented for the three and nine months ended December 31, 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 are classified in net sales during the three and nine months ended December 31, 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 December 31,						Nine Months Ended December 31,
	2019			2018			2019		2018
Income tax (benefit) expense*	$	(311	)	$	(807	)	$	66	$	259

*Amounts for the three and nine months ended December 31, 2018 are inclusive of the stranded income tax effects from the Tax Reform Act reclassified from AOCL to retained earnings in the condensed consolidated balance sheets in connection with the previous adoption of a new accounting standard.

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



	Three Months Ended December 31,				Nine Months Ended December 31,
	2019		2018		2019		2018
Gain recognized in SG&A expenses	$	192	$	504	$	338	$	1,241

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 December 31, 2019, the amount of unrealized gains on derivative contracts recognized in AOCL is expected to be reclassified into net sales within the next six months. Refer to Note 10, “Stockholders' Equity,” for further information on the components of AOCL.