Derivative Instruments

The Company entered into $1.40 billion of notional interest rate swap agreements concurrently with its Credit Facilities (as defined under Note 10 – “Debt”), on May 31, 2018, and $200 million of notional interest rate swap agreements in October 2018. As of March 31, 2020, the Company had interest rate swap agreements with a total notional amount of $1.60 billion.

The pre-tax impact of loss on derivatives designated for hedge accounting recognized in other comprehensive income (loss) was $59 million ($44 million, net of tax) and $31 million ($23 million, net of tax) during the fiscal years ended March 31, 2020 and 2019, respectively. We reclassified $11 million ($8 million, net of tax) and $8 million ($6 million, net of tax) from AOCL into earnings during the fiscal years ended March 31, 2020 and 2019, respectively. As of March 31, 2020, we expect amounts of approximately $39 million pertaining to cash flow hedges to be reclassified from AOCL into earnings over the next 12 months.

Fair Value of Derivative Instruments

All derivatives are recorded at fair value on a recurring basis. The Company’s accounting treatment for these derivative instruments is based on its hedge designation. The fair value of interest rate swaps is estimated based on valuation models that use interest rate yield curves as Level 2 inputs. The gross fair value of our derivative liabilities in interest rate swaps designated for hedge accounting were as follows:



(in millions)	Balance Sheets Line Item	March 31, 2020		March 31, 2019
Derivative liabilities:
Interest rate swaps	Other current liabilities	$	37	$	4
Interest rate swaps	Other liabilities	50		22
Total derivative liabilities		$	87	$	26

Other risks

The Company is exposed to the risk of losses in the event of non-performance by counter parties to its derivative contracts. To mitigate counter party credit risk, the Company regularly reviews its credit exposure and the creditworthiness of counter parties. The Company also enters into enforceable master netting arrangements with some of its counter parties. However, for financial reporting purposes, it is Company policy not to offset derivative assets and liabilities despite the existence of enforceable master netting arrangements with some of its counter parties.