XML 24 R10.htm IDEA: XBRL DOCUMENT
v3.21.1

Derivative Financial Instruments | 9 Months Ended
--- | ---
Mar. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities Disclosure | Derivative Financial Instruments We use derivative financial instruments, such as interest rate swap contracts, cross-currency swap contracts, and currency forward and option contracts, to manage interest rate and foreign currency exposures. Derivatives are recorded in the consolidated balance sheets at fair value. If the derivative is designated as a cash flow hedge or net investment hedge, then the change in the fair value of the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings. Additionally, any ineffectiveness associated with an effective and designated hedge is recognized within accumulated other comprehensive loss. The change in the fair value of derivatives not designated as hedges is recognized directly in earnings as a component of other income (expense), net. Hedges of Interest Rate Risk We enter into interest rate swap contracts to manage variability in the amount of our known or expected cash payments related to a portion of our debt. Our objective in using interest rate swaps is to add stability to interest expense and to manage our exposure to interest rate movements. We designate our interest rate swaps as cash flow hedges. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Realized gains or losses from interest rate swaps are recorded in earnings as a component of interest expense, net. Amounts reported in accumulated other comprehensive loss related to interest rate swap contracts will be reclassified to interest expense, net as interest payments are accrued or made on our variable-rate debt. As of March 31, 2021, we estimate that $10,439 will be reclassified from accumulated other comprehensive loss to interest expense during the twelve months ending March 31, 2022. As of March 31, 2021, we had ten outstanding interest rate swap contracts indexed to USD LIBOR all of which are no longer highly effective and have therefore been de-designated. These hedges have varying start dates and maturity dates through December 2026.
Interest rate swap contracts outstanding: |  | Notional Amounts
Contracts accruing interest as of March 31, 2021 |  | $ | 500,000 |
Contracts with a future start date |  | 50,000 |
Total |  | $ | 550,000 |
Hedges of Currency Risk Cross-Currency Swap Contracts From time to time, we execute cross-currency swap contracts designated as cash flow hedges or net investment hedges. Cross-currency swaps involve an initial receipt of the notional amount in the hedge currency in exchange for our reporting currency based on a contracted exchange rate. Subsequently, we receive fixed rate payments in our reporting currency in exchange for fixed rate payments in the hedged currency over the life of the contract. At maturity, the final exchange involves the receipt of our reporting currency in exchange for the notional amount in the hedged currency. Cross-currency swap contracts designated as cash flow hedges are executed to mitigate our currency exposure to the interest receipts as well as the principal remeasurement and repayment associated with certain intercompany loans denominated in a currency other than our reporting currency, the U.S. dollar. As of March 31, 2021, we had two outstanding cross-currency swap contracts designated as cash flow hedges with a total notional amount of $120,874, both maturing during June 2024. We entered into the two cross-currency swap contracts to hedge the risk of changes in one Euro-denominated intercompany loan entered into with one of our consolidated subsidiaries that has the Euro as its functional currency. Amounts reported in accumulated other comprehensive loss will be reclassified to other income (expense), net as interest payments are accrued or paid and upon remeasuring the intercompany loan. As of March 31, 2021, we estimate that $2,623 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending March 31, 2022. Other Currency Contracts We execute currency forward and option contracts in order to mitigate our exposure to fluctuations in various currencies against our reporting currency, the U.S. dollar. As of March 31, 2021, we had five currency forward contracts designated as net investment hedges with a total notional amount of $149,604, maturing during various dates through April 2023. We entered into these contracts to hedge the risk of changes in the U.S. dollar equivalent value of a portion of our net investment in two consolidated subsidiaries that have the Euro as their functional currency. Amounts reported in accumulated other comprehensive loss are recognized as a component of our cumulative translation adjustment. We have elected to not apply hedge accounting for all other currency forward and option contracts. During the three and nine months ended March 31, 2021 and 2020, we have experienced volatility within other income (expense), net in our consolidated statements of operations from unrealized gains and losses on the mark-to-market of outstanding currency forward and option contracts. We expect this volatility to continue in future periods for contracts for which we do not apply hedge accounting. Additionally, since our hedging objectives may be targeted at non-GAAP financial metrics that exclude non-cash items such as depreciation and amortization, we may experience increased, not decreased, volatility in our GAAP results as a result of our currency hedging program. As of March 31, 2021, we had the following outstanding currency derivative contracts that were not designated for hedge accounting and were used to hedge fluctuations in the U.S. dollar value of forecasted transactions or balances denominated in Australian Dollar, British Pound, Canadian Dollar, Danish Krone, Euro, Indian Rupee, Japanese Yen, Mexican Peso, New Zealand Dollar, Norwegian Krone, Philippine Peso, Swiss Franc and Swedish Krona:
Notional Amount |  | Effective Date |  | Maturity Date |  | Number of Instruments |  | Index
$477,464 |  | June 2019 through March 2021 |  | Various dates through October 2024 |  | 608 |  | Various
Financial Instrument Presentation The table below presents the fair value of our derivative financial instruments as well as their classification on the balance sheet as of March 31, 2021 and June 30, 2020. Our derivative asset and liability balances will fluctuate with interest rate and currency exchange rate volatility.
| March 31, 2021
| Asset Derivatives |  | Liability Derivatives
| Balance Sheet line item |  | Gross amounts of recognized assets |  | Gross amount offset in Consolidated Balance Sheet |  | Net amount |  | Balance Sheet line item |  | Gross amounts of recognized liabilities |  | Gross amount offset in Consolidated Balance Sheet |  | Net amount
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives in cash flow hedging relationships |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps | Other assets |  | $ | 145 |  |  | $ | — |  |  | $ | 145 |  |  | Other liabilities |  | $ | (7,978) |  |  | $ | — |  |  | $ | (7,978) |
Derivatives in net investment hedging relationships |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency forward contracts | Other assets |  | — |  |  | — |  |  | — |  |  | Other current liabilities / other liabilities |  | (12,386) |  |  | — |  |  | (12,386) |
Total derivatives designated as hedging instruments |  |  | $ | 145 |  |  | $ | — |  |  | $ | 145 |  |  |  |  | $ | (20,364) |  |  | $ | — |  |  | $ | (20,364) |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps | Other assets |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | Other liabilities |  | $ | (24,632) |  |  | $ | 651 |  |  | $ | (23,981) |
Currency forward contracts | Other current assets / other assets |  | 1,344 |  |  | (160) |  |  | 1,184 |  |  | Other current liabilities / other liabilities |  | (13,198) |  |  | 4,102 |  |  | (9,096) |
Currency option contracts | Other current assets / other assets |  | 385 |  |  | (305) |  |  | 80 |  |  | Other current liabilities / other liabilities |  | (2,919) |  |  | 121 |  |  | (2,798) |
Total derivatives not designated as hedging instruments |  |  | $ | 1,729 |  |  | $ | (465) |  |  | $ | 1,264 |  |  |  |  | $ | (40,749) |  |  | $ | 4,874 |  |  | $ | (35,875) |
| June 30, 2020
| Asset Derivatives |  | Liability Derivatives
| Balance Sheet line item |  | Gross amounts of recognized assets |  | Gross amount offset in Consolidated Balance Sheet |  | Net amount |  | Balance Sheet line item |  | Gross amounts of recognized liabilities |  | Gross amount offset in Consolidated Balance Sheet |  | Net amount
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives in cash flow hedging relationships |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps | Other current assets / other assets |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | Other liabilities |  | $ | (31,161) |  |  | $ | — |  |  | $ | (31,161) |
Cross-currency swaps | Other assets |  | 4,462 |  |  | — |  |  | 4,462 |  |  | Other liabilities |  | (4,746) |  |  | — |  |  | (4,746) |
Derivatives in net investment hedging relationships |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency forward contracts | Other assets |  | — |  |  | — |  |  | — |  |  | Other current liabilities / other liabilities |  | (6,829) |  |  | — |  |  | (6,829) |
Total derivatives designated as hedging instruments |  |  | $ | 4,462 |  |  | $ | — |  |  | $ | 4,462 |  |  |  |  | $ | (42,736) |  |  | $ | — |  |  | $ | (42,736) |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps | Other assets |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | Other liabilities |  | $ | (8,359) |  |  | $ | — |  |  | $ | (8,359) |
Currency forward contracts | Other current assets / other assets |  | 9,702 |  |  | (1,753) |  |  | 7,949 |  |  | Other current liabilities / other liabilities |  | (2,136) |  |  | 446 |  |  | (1,690) |
Currency option contracts | Other current assets / other assets |  | 1,699 |  |  | (270) |  |  | 1,429 |  |  | Other current liabilities / other liabilities |  | (38) |  |  | — |  |  | (38) |
Total derivatives not designated as hedging instruments |  |  | $ | 11,401 |  |  | $ | (2,023) |  |  | $ | 9,378 |  |  |  |  | $ | (10,533) |  |  | $ | 446 |  |  | $ | (10,087) |
The following table presents the effect of our derivative financial instruments designated as hedging instruments and their classification within comprehensive (loss) income for the three and nine months ended March 31, 2021 and 2020:
| Amount of Net Gain (Loss) on Derivatives Recognized in Comprehensive Income |  |
| Three Months Ended March 31, |  | Nine Months Ended March 31, |  |
| 2021 |  | 2020 |  | 2021 |  | 2020 |  |  |  |
Derivatives in cash flow hedging relationships |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps | $ | 6,244 |  |  | $ | (24,645) |  |  | $ | 7,386 |  |  | $ | (24,841) |  |  |  |  |
Cross-currency swaps | (435) |  |  | 3,444 |  |  | 6,061 |  |  | 2,583 |  |  |  |  |
Derivatives in net investment hedging relationships |  |  |  |  |  |  |  |  |  |  |
Currency forward contracts | 8,064 |  |  | 14,284 |  |  | (16,768) |  |  | 22,849 |  |  |  |  |
Total | $ | 13,873 |  |  | $ | (6,917) |  |  | $ | (3,321) |  |  | $ | 591 |  |  |  |  |
The following table presents reclassifications out of accumulated other comprehensive loss for the three and nine months ended March 31, 2021 and 2020:
|  | Amount of Net Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income | Affected line item in the Statement of Operations
|  | Three Months Ended March 31, |  | Nine Months Ended March 31, |
|  | 2021 |  | 2020 |  | 2021 |  | 2020 |  |  |
Derivatives in cash flow hedging relationships |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | (4,396) |  |  | $ | 691 |  |  | $ | 227 |  |  | $ | 1,146 |  |  |  | Interest expense, net
Cross-currency swaps |  | 661 |  |  | 2,665 |  |  | (9,631) |  |  | 6,203 |  |  |  | Other income (expense), net
Total before income tax |  | (3,735) |  |  | 3,356 |  |  | (9,404) |  |  | 7,349 |  |  |  | (Loss) income before income taxes
Income tax |  | 650 |  |  | (825) |  |  | 1,022 |  |  | (1,812) |  |  |  | Income tax expense (benefit)
Total |  | $ | (3,085) |  |  | $ | 2,531 |  |  | $ | (8,382) |  |  | $ | 5,537 |  |  |  |
The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the three and nine months ended March 31, 2021 and 2020 for derivative instruments for which we did not elect hedge accounting and de-designated derivative financial instruments that no longer qualify as hedging instruments.
| Amount of Gain (Loss) Recognized in Net (Loss) Income | Affected line item in the Statement of Operations
|  | Three Months Ended March 31, |  | Nine Months Ended March 31, |
|  | 2021 |  | 2020 |  | 2021 |  | 2020 |  |  |
Currency contracts |  | $ | 12,329 |  |  | $ | 18,039 |  |  | $ | (20,635) |  |  | $ | 25,730 |  |  |  | Other income (expense), net
Interest rate swaps |  | 6,395 |  |  | — |  |  | 6,844 |  |  | — |  |  |  | Other income (expense), net
Total |  | $ | 18,724 |  |  | $ | 18,039 |  |  | $ | (13,791) |  |  | $ | 25,730 |  |  |  |

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration