DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

As part of our financial risk management program, we use certain derivative financial instruments. See Note 2 for discussion on our derivative instruments and hedging activities policy.

The fair value of derivatives designated and not designated as hedging instruments in the consolidated balance sheet are as follows:



(in thousands)	2018			2017
Derivatives designated as hedging instruments
Other current assets - range forward contracts	$	799		$	1
Other current liabilities - range forward contracts	(5		)	(671		)
Other assets - range forward contracts	27			—
Other liabilities - range forward contracts	—			(101		)
Total derivatives designated as hedging instruments	821			(771		)
Derivatives not designated as hedging instruments
Other current assets - currency forward contracts	839			358
Other current liabilities - currency forward contracts	(202		)	(138		)
Total derivatives not designated as hedging instruments	637			220
Total derivatives	$	1,458		$	(551	)

Certain currency forward contracts that hedge significant cross-border intercompany loans are considered as other derivatives and therefore do not qualify for hedge accounting. These contracts are recorded at fair value in the consolidated balance sheet, with the offset to other expense (income), net. Gains related to derivatives not designated as hedging instruments have been recognized as follows:



(in thousands)	2018			2017			2016
Other expense (income), net - currency forward contracts	$	(122	)	$	(873	)	$	719

FAIR VALUE HEDGES

Fixed-to-floating interest rate swap contracts, designated as fair value hedges, are entered into from time to time to hedge our exposure to fair value fluctuations on a portion of our fixed rate debt. We had no such contracts outstanding at June 30, 2018 and June 30, 2017.

CASH FLOW HEDGES

Currency forward contracts and range forward contracts (a transaction where both a put option is purchased and a call option is sold) are designated as cash flow hedges and hedge anticipated cash flows from cross-border intercompany sales of products and services. Gains and losses realized on these contracts are recorded in accumulated other comprehensive loss, and are recognized as a component of other expense (income), net when the underlying sale of products or services is recognized into earnings. The notional amount of the contracts translated into U.S. dollars at June 30, 2018 and 2017 was $62.9 million and $75.3 million, respectively. The time value component of the fair value of range forward contracts is excluded from the assessment of hedge effectiveness. Assuming the market rates remain constant with the rates at June 30, 2018, we expect to recognize into earnings in the next 12 months $0.5 million of income on outstanding derivatives.

The following represents gains and losses related to cash flow hedges:



(in thousands)	2018			2017			2016
Losses recognized in other comprehensive income (loss), net	$	(922	)	$	(471	)	$	(297	)
Losses reclassified from accumulated other comprehensive loss into other expense (income), net	$	3,001		$	1,557		$	381

No portion of the gains or losses recognized in earnings was due to ineffectiveness and no amounts were excluded from our effectiveness testing for the years ended June 30, 2018, 2017 and 2016.

NET INVESTMENT HEDGES

As of June 30, 2018, we had certain foreign currency-denominated intercompany loans payable with total aggregate principal amounts of €33.0 million designated as net investment hedges to hedge the foreign exchange exposure of our net investment in Euro-based subsidiaries. Losses of $0.7 million and $4.5 million were recorded as a component of foreign currency translation adjustments in other comprehensive income (loss) during 2018 and 2017, respectively. We did not have net investment hedges during 2016.

As of June 30, 2018, the foreign currency-denominated intercompany loans payable designated as net investment hedges consisted of:



Instrument	Notional (EUR in thousands)⁽²⁾		Notional (USD in thousands)⁽²⁾		Maturity
Foreign currency-denominated intercompany loan payable	€	27,325	$	31,819	June 26, 2022
Foreign currency-denominated intercompany loan payable	8,707		10,139		November 20, 2018
Foreign currency-denominated intercompany loan payable	2,014		2,345		October 11, 2019

⁽²⁾ Includes principal and accrued interest.