XML 39 R24.htm IDEA: XBRL DOCUMENT
v3.25.0.1

Derivatives and Hedging Activities | 6 Months Ended
--- | ---
Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Activities | 14. DERIVATIVES AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposures to a wide variety of business and operational risks. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s receivables and borrowings. Certain of the Company’s foreign operations expose the Company to fluctuations of foreign exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency. The Company enters into derivative financial instruments to protect the value or fix the amount of certain assets and liabilities in terms of its functional currency, the U.S. Dollar. Accordingly, the Company uses derivative financial instruments to manage and mitigate such risks. The Company does not use derivatives for speculative or trading purposes. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During the three and six months ended December 31, 2024 and 2023, such derivatives were used to hedge the variable cash flows associated with existing variable rate debt. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCL and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in AOCL related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt. During the next 12 months, the Company estimates that an additional $4,276 will be reclassified as a decrease to interest expense. As of December 31, 2024, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
Interest Rate Derivative |  | Number of Instruments |  | Notional Amount |
Interest rate swap |  | 4 |  | $ | 400,000 |
Cash Flow Hedges of Foreign Exchange Risk The Company is exposed to fluctuations in various foreign currencies against its functional currency, the U.S. Dollar. The Company, at times, uses forward contracts to manage its exposure to fluctuations in the GBP-EUR exchange rates. The Company designates these derivatives as cash flow hedges of foreign exchange risks. For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in AOCL and subsequen tly reclassified in the same period during which the hedged transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. During the next 12 months, the Company estimates that an additional $70 relating to the foreign currency forward contracts will be reclassified to interest expense. As of December 31, 2024, the Company had the following outstanding foreign currency derivatives that were used to hedge its foreign exchange risks:
Foreign Currency Derivative |  | Number of Instruments |  | Notional Sold |  |  | Notional Purchased |
Foreign currency forward contract |  | 12 |  | £ | 26,805 |  |  | € | 31,850 |
Net Investment Hedges The Company is exposed to fluctuations in foreign exchange rates on investments it holds in its European foreign entities and their exposure to the Euro. The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in the foreign exchange rate on its foreign investment in Western Europe. Currency forward agreements involve fixing the USD-EUR exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in U.S. Dollars for their fair value at or close to their settlement date. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency- fixed-rate payments over the life of the agreement. For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCL as part of the cumulative translation adjustment. Amounts are reclassified out of AOCL into earnings when the hedged net investment is either sold or substantially liquidated. As of December 31, 2024, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations:
Foreign Currency Derivative |  | Number of Instruments |  | Notional Sold |  |  | Notional Purchased |
Cross-currency swap |  | 4 |  | € | 100,300 |  |  | $ | 105,804 |
Fair Value Hedges The Company is exposed to changes in the fair value of certain of its foreign denominated intercompany loans due to changes in foreign exchange spot rates. The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in foreign exchange rates affecting gains and losses on intercompany loan principal and interest. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency-fixed-rate payments over the life of the agreement. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest and other financing expense, net. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company’s accounting policy election. The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction. During the next 12 months, the Company estimates that a n additional $476 relating to cross currency swaps will be reclassified as a decrease to interest expense. As of December 31, 2024, the Company had the following outstanding foreign currency derivatives that were used to hedge changes in fair value attributable to foreign exchange risk:
Foreign Currency Derivative |  | Number of Instruments |  | Notional Sold |  |  | Notional Purchased |
Cross-currency swap |  | 1 |  | € | 24,700 |  |  | $ | 26,021 |
As of December 31, 2024 and June 30, 2024, the following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustment for fair value hedges:
|  | Carrying Amount of the Hedged Asset |  |  | Cumulative Amount of Fair Value Hedge Adjustment Included in the Carrying Amount of the Hedged Asset |
|  | December 31, 2024 |  |  | June 30, 2024 |  |  | December 31, 2024 |  |  | June 30, 2024 |
Intercompany loan receivable |  | $ | 25,572 |  |  | $ | 26,465 |  |  | $ | (893 | ) |  | $ | (480 | )
Designated Hedges The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheet as of December 31, 2024:
|  | Asset Derivatives |  |  | Liability Derivatives |
|  | Balance Sheet Location |  | Fair Value |  |  | Balance Sheet Location |  | Fair Value |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | Prepaid expenses and other current assets |  | $ | 4,263 |  |  | Accrued expenses and other current liabilities |  | $ | — |
Interest rate swaps |  | Other noncurrent assets |  |  | 3,317 |  |  | Other noncurrent liabilities |  |  | — |
Cross-currency swaps |  | Prepaid expenses and other current assets |  |  | 2,388 |  |  | Accrued expenses and other current liabilities |  |  | — |
Cross-currency swaps |  | Other noncurrent assets |  |  | — |  |  | Other noncurrent liabilities |  |  | 472 |
Foreign currency forward contracts |  | Prepaid expenses and other current assets |  |  | — |  |  | Accrued expenses and other current liabilities |  |  | 456 |
Total derivatives designated as hedging instruments |  |  |  | $ | 9,968 |  |  |  |  | $ | 928 |
The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheet as of June 30, 2024:
|  | Asset Derivatives |  |  | Liability Derivatives |
|  | Balance Sheet Location |  | Fair Value |  |  | Balance Sheet Location |  | Fair Value |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | Prepaid expenses and other current assets |  | $ | 7,455 |  |  | Accrued expenses and other current liabilities |  | $ | — |
Interest rate swaps |  | Other noncurrent assets |  |  | 5,151 |  |  | Other noncurrent liabilities |  |  | — |
Cross-currency swaps |  | Prepaid expenses and other current assets |  |  | 2,376 |  |  | Accrued expenses and other current liabilities |  |  | — |
Cross-currency swaps |  | Other noncurrent assets |  |  | — |  |  | Other noncurrent liabilities |  |  | 3,333 |
Total derivatives designated as hedging instruments |  |  |  | $ | 14,982 |  |  |  |  | $ | 3,333 |
The following table presents the pre-tax effect of the Company’s cash flow hedges, net investment hedges, and fair value hedges on AOCL for the three and six months ended December 31, 2024 and 2023:
|  | Amount of Gain (Loss) Recognized in AOCL on Derivatives |
|  | Three Months Ended December 31, |  |  | Six Months Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Derivatives in cash flow hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 6,389 |  |  | $ | (7,725 | ) |  | $ | (978 | ) |  | $ | (2,247 | )
Foreign currency forward contracts |  |  | (456 | ) |  |  | 10 |  |  |  | (456 | ) |  |  | 51 |
Derivatives in net investment hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps |  |  | 6,579 |  |  |  | (3,979 | ) |  |  | 3,297 |  |  |  | (1,663 | )
Derivatives in fair value hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps |  |  | 1,620 |  |  |  | (981 | ) |  |  | 811 |  |  |  | (409 | )
|  | $ | 14,132 |  |  | $ | (4,960 | ) |  | $ | 4,108 |  |  | $ | (2,072 | )
The following table presents the pre-tax effect of the Company’s cash flow hedges, net investment hedges, and fair value hedges on the consolidated statements of operations, recorded in interest and other financing expense, net, for the three and six months ended December 31, 2024 and 2023:
|  | Amount of Gain Reclassified from AOCL into Income (Expense) |
|  | Three Months Ended December 31, |  |  | Six Months Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Derivatives in cash flow hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 1,840 |  |  | $ | 2,393 |  |  | $ | 4,176 |  |  | $ | 4,675 |
Derivatives in net investment hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps |  |  | 495 |  |  |  | 495 |  |  |  | 989 |  |  |  | 990 |
Derivatives in fair value hedging relationships: |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps(1) |  |  | 2,099 |  |  |  | (1,028 | ) |  |  | 1,140 |  |  |  | (75 | )
|  | $ | 4,434 |  |  | $ | 1,860 |  |  | $ | 6,305 |  |  | $ | 5,590 |
(1) Net of amount that is excluded from effectiveness testing. Amount of gain, excluded from effectiveness testing, reclassified from A OCL into income for the three months ended December 31, 2024 and 2023 was $123. Amount of gain, excluded from effectiveness testing, reclassified from AOCL into income for the six months ended December 31, 2024 and 2023 was $247.

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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration