Derivative Instruments

3 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company enters into foreign currency forward or option contracts (derivative contracts), with maturities of 15 months or less, to manage foreign currency risk and certain of these derivative contracts are designated as cash flow hedges of forecasted sales (Designated Derivative Contracts). The Company also enters into derivative contracts that are not designated as cash flow hedges (Non-Designated Derivative Contracts), to offset a portion of the anticipated gains and losses on certain intercompany balances until the expected time of repayment. The Company does not use derivative contracts for trading purposes.

The after-tax unrealized gains or losses from changes in fair value of Designated Derivative Contracts is recorded as a component of accumulated other comprehensive loss (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 recognized. 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 OCI in the condensed consolidated statements of comprehensive income. The Company includes all hedge components in its assessment of effectiveness for its derivative contracts.

Changes in the fair value of Non-Designated Derivative Contracts are recorded in SG&A expenses in the condensed consolidated statements of comprehensive income. The changes in fair value for these contracts are offset by the remeasurement gains or losses associated with the underlying foreign currency-denominated intercompany balances, which are recorded in SG&A expenses in the condensed consolidated statements of comprehensive income.

As of June 30, 2023, the Company has the following derivative contracts recorded at fair value in the condensed consolidated balance sheets:


	Designated Derivative Contracts		Non-Designated Derivative Contracts		Total
Notional value	$	114,312	$	—	$	114,312
Fair value recorded in other current assets	418		—		418
Fair value recorded in other accrued expenses	(90)		—		(90)

As of June 30, 2023, three counterparties hold the Company's outstanding derivative contracts, all of which are expected to mature in the next nine months. As of March 31, 2023, the Company had no outstanding derivative contracts.

The following table summarizes the effect of Designated Derivative Contracts and the related income tax effects of unrealized gains or losses recorded in the condensed consolidated statements of comprehensive income for changes in AOCL:


	Three Months Ended June 30,
		2023		2022
Gain recorded in Other comprehensive income		$	411	$	1,000
Reclassifications from Accumulated other comprehensive gain into net sales		21		—
Income tax expense in Other comprehensive income		(80)		(242)
Total		$	352	$	758

The following table summarizes the effect of Non-Designated Derivative Contracts recorded in the condensed consolidated statements of comprehensive income:


	Three Months Ended June 30,
		2023		2022
Gain recorded in SG&A expenses		$	—	$	80

The non-performance risk of the Company and its counterparties did not have a material impact on the fair value of its derivative contracts. As of June 30, 2023, the amount of unrealized gains on derivative contracts recorded in AOCL is expected to be reclassified into net sales within the next nine months. Refer to Note 7, "Stockholders' Equity," for further information on the components of AOCL.

Subsequent to June 30, 2023, through July 13, 2023, the Company entered into Designated Derivative Contracts measured at fair value with notional values totaling $44,302, which are collectively expected to mature within the next nine months. As of July 13, 2023, the Company’s outstanding hedging contracts are held by an aggregate of three counterparties.