XML 201 R20.htm IDEA: XBRL DOCUMENT v3.25.1
Derivatives
12 Months Ended
Mar. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
The Company utilizes derivative financial instruments to manage interest rate risk related to its variable rate debt. The Company’s objectives in using these interest rate derivatives, which were designated as cash flow hedges, are to manage its exposure to interest rate movements and reduce volatility of interest expense. The Company’s outstanding interest rate swaps have a total notional amount of $550 million as of March 31, 2025 and mature from June 30, 2025 to June 30, 2027. The variable-to-fixed interest rate swaps effectively convert a portion of the variable rate debt into fixed interest rate debt.
For interest rate swaps designated as cash flow hedges, the changes in the fair value of derivatives is recorded in Accumulated Other Comprehensive Income (Loss) (“AOCI”), net of taxes, and are subsequently reclassified into interest expense, net in the period that the hedged forecasted interest payments are made on the Company's variable-rate debt. See Note 15, “Accumulated Other Comprehensive Income (Loss),” and Note 10, “Debt,” to the consolidated financial statements for additional information on reclassifications from AOCI and interest payments related to the derivatives, and Note 18, “Fair Value Measurements,” to the consolidated financial statements for additional information on the fair values and location of our derivative instruments on the consolidated balance sheets.
Over the next 12 months, the Company estimates that $1 million will be reclassified as a decrease to interest expense. Cash flows associated with periodic settlements of interest rate swaps are classified as operating activities in the consolidated statement of cash flows.
The Company is subject to counterparty risk in connection with its interest rate swap derivative contracts. Credit risk related to a derivative financial instrument represents the possibility that the counterparty will not fulfill the terms of the contract. The Company mitigates this credit risk by entering into agreements with credit-worthy counterparties and regularly reviews its credit exposure and the creditworthiness of the counterparties.