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Derivative Financial Instruments | 3 Months Ended
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Jun. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | (4) DERIVATIVE FINANCIAL INSTRUMENTS Assets or liabilities associated with our derivative instruments and hedging activities are recorded at fair value in other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. As discussed below, the accounting for gains and losses resulting from changes in fair value depends on the use of the derivative instrument and whether it is designated and qualifies for hedge accounting. We transact business in various foreign currencies and have significant international sales and expenses denominated in foreign currencies, subjecting us to foreign currency risk. We purchase foreign currency forward contracts, generally with maturities of 18 months or less, to reduce the volatility of cash flows primarily related to forecasted revenue and expenses denominated in certain foreign currencies. Our cash flow risks are primarily related to fluctuations in the Euro, British pound sterling, Canadian dollar, Swedish krona, Australian dollar, Japanese yen, Chinese yuan, South Korean won and Polish zloty. In addition, we utilize foreign currency forward contracts to mitigate foreign currency exchange risk associated with foreign-currency-denominated monetary assets and liabilities, primarily intercompany receivables and payables. The foreign currency forward contracts not designated as hedging instruments generally have a contractual term of approximately three months or less and are transacted near month-end. We do not use foreign currency forward contracts for speculative trading purposes. Cash Flow Hedging Activities Certain of our forward contracts are designated and qualify as cash flow hedges. To qualify for hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedges and must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative assets or liabilities associated with our hedging activities are recorded at fair value in other current assets/other assets, or accrued and other current liabilities/other liabilities, respectively, on our Condensed Consolidated Balance Sheets. The gains or losses resulting from changes in the fair value of these hedges is initially reported, net of tax, as a component of accumulated other comprehensive income (loss) in stockholders’ equity. The gains or losses resulting from changes in the fair value of these hedges is subsequently reclassified into net revenue or research and development expenses, as appropriate, in the period when the forecasted transaction is recognized in our Condensed Consolidated Statements of Operations. In the event that the underlying forecasted transactions do not occur, or it becomes remote that they will occur, within the defined hedge period, the gains or losses on the related cash flow hedges are reclassified from accumulated other comprehensive income (loss) to net revenue or research and development expenses, in our Condensed Consolidated Statements of Operations. Total gross notional amounts and fair values for currency derivatives with cash flow hedge accounting designation are as follows (in millions):
| As of June 30, 2022 |  | As of March 31, 2022
| Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value
|  | Asset |  | Liability |  |  | Asset |  | Liability
Forward contracts to purchase | $ | 261 |  |  | $ | — |  |  | $ | 11 |  |  | $ | 375 |  |  | $ | 4 |  |  | $ | 3 |
Forward contracts to sell | $ | 1,917 |  |  | $ | 153 |  |  | $ | — |  |  | $ | 1,829 |  |  | $ | 52 |  |  | $ | 6 |
The effects of cash flow hedge accounting in our Condensed Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021 are as follows (in millions):
| Three Months Ended June 30, |  |
| 2022 |  | 2021 |  |  |  |
| Net revenue |  | Research and development |  | Net revenue |  | Research and development |  |  |  |  |  |  |  |
Total amounts presented in our Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded | $ | 1,767 |  |  | $ | 572 |  |  | $ | 1,551 |  |  | $ | 515 |  |  |  |  |  |  |  |  |
Gains (losses) on foreign currency forward contracts designated as cash flow hedges | $ | 19 |  |  | $ | (3) |  |  | $ | (19) |  |  | $ | 8 |  |  |  |  |  |  |  |  |
Balance Sheet Hedging Activities Our foreign currency forward contracts that are not designated as hedging instruments are accounted for as derivatives whereby the fair value of the contracts are reported as other current assets or accrued and other current liabilities on our Condensed Consolidated Balance Sheets, and gains and losses resulting from changes in the fair value are reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations. The gains and losses on these foreign currency forward contracts generally offset the gains and losses in the underlying foreign-currency-denominated monetary assets and liabilities, which are also reported in interest and other income (expense), net, in our Condensed Consolidated Statements of Operations. Total gross notional amounts and fair values for currency derivatives that are not designated as hedging instruments are accounted for as follows (in millions):
| As of June 30, 2022 |  | As of March 31, 2022
| Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value
|  | Asset |  | Liability |  |  | Asset |  | Liability
Forward contracts to purchase | $ | 361 |  |  | $ | 2 |  |  | $ | 1 |  |  | $ | 496 |  |  | $ | 6 |  |  | $ | — |
Forward contracts to sell | $ | 323 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | 400 |  |  | $ | 1 |  |  | $ | 5 |
The effect of foreign currency forward contracts not designated as hedging instruments in our Condensed Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021 was as follows (in millions):
| Three Months Ended June 30, |  |
| 2022 |  | 2021 |  |  |  |
| Interest and other income (expense), net
Total amounts presented in our Condensed Consolidated Statements of Operations in which the effects of balance sheet hedges are recorded | $ | (5) |  |  | $ | (14) |  |  |  |  |
Gain (losses) on foreign currency forward contracts not designated as hedging instruments | $ | 13 |  |  | $ | (7) |  |  |  |  |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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