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 a 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. We have designated one intercompany loan as a net investment hedge, and any unrealized currency gains and losses on the loan are recorded in accumulated other comprehensive loss. Additionally, any ineffectiveness associated with an effective and designated hedge is recognized within accumulated other comprehensive loss.

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 December 31, 2022, we estimate that $8,207 will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending December 31, 2023. As of December 31, 2022, we had fourteen effective outstanding interest rate swap contracts. Twelve of our swaps are indexed to USD LIBOR, while the remaining two are indexed to Term SOFR. The transition relief guidance from ASC 848 was applied to designate the two Term SOFR swap contracts that we entered into during the current quarter for hedge accounting. After USD LIBOR sunsets on June 30, 2023, we may convert our contracts to index to Term SOFR, otherwise the contracts will be subject to the fallback language within our credit agreement.

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 hedged 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 December 31, 2022, we had one outstanding cross-currency swap contract designated as a cash flow hedge with a total notional amount of $58,478, maturing during June 2024. We entered into the cross-currency swap contract 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 (expense) income, net as interest payments are accrued or paid and upon remeasuring the intercompany loan. As of December 31, 2022, we estimate that $1,794 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending December 31, 2023.

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. These contracts or intercompany loans may be designated as hedges to mitigate the risk of changes in the U.S. dollar equivalent value of a portion of our net investment in 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.

income, 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 December 31, 2022, 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:

The table below presents the fair value of our derivative financial instruments as well as their classification on the balance sheet as of December 31, 2022 and June 30, 2022. Our derivative asset and liability balances fluctuate with interest rate and currency exchange rate volatility.


	December 31, 2022
	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 in cash flow hedging relationships
Interest rate swaps	Other assets	$	23,554	$	(4)	$	23,550	Other current liabilities / other liabilities	$	—	$	—	$	—
Cross-currency swaps	Other assets	—		—		—		Other liabilities	(1,313)		—		(1,313)



Total derivatives designated as hedging instruments		$	23,554	$	(4)	$	23,550		$	(1,313)	$	—	$	(1,313)

Derivatives not designated as hedging instruments


Currency forward contracts	Other current assets / other assets	$	5,920	$	(1,341)	$	4,579	Other current liabilities / other liabilities	$	(6,128)	$	2,474	$	(3,654)
Currency option contracts	Other current assets / other assets	4,537		(23)		4,514		Other liabilities	(1,243)		644		(599)
Total derivatives not designated as hedging instruments		$	10,457	$	(1,364)	$	9,093		$	(7,371)	$	3,118	$	(4,253)


	June 30, 2022
	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	$	14,336	$	—	$	14,336	Other current liabilities / other liabilities	$	—	$	—	$	—
Cross-currency swaps	Other assets	—		—		—		Other liabilities	(446)		—		$	(446)



Total derivatives designated as hedging instruments		$	14,336	$	—	$	14,336		$	(446)	$	—	$	(446)

Derivatives not designated as hedging instruments


Currency forward contracts	Other current assets / other assets	$	24,440	$	(3,802)	$	20,638	Other current liabilities / other liabilities	$	(505)	$	—	$	(505)
Currency option contracts	Other current assets / other assets	10,612		(1)		10,611		Other current liabilities / other liabilities	(9)		—		(9)
Total derivatives not designated as hedging instruments		$	35,052	$	(3,803)	$	31,249		$	(514)	$	—	$	(514)

The following table presents the effect of our derivative financial instruments designated as hedging instruments and their classification within comprehensive (loss) income, net of tax, for the three and six months ended December 31, 2022 and 2021:


	Three Months Ended December 31,				Six Months Ended December 31,
	2022		2021		2022		2021
Derivatives in cash flow hedging relationships
Interest rate swaps	$	(1,266)	$	5,021	$	11,688	$	5,540
Cross-currency swaps	(4,383)		(7,519)		(577)		(9,963)
Derivatives in net investment hedging relationships

Intercompany loan	(18,636)		8,359		(5,684)		17,386
Currency forward contracts	—		2,922		—		6,414
Total	$	(24,285)	$	8,783	$	5,427	$	19,377


	Amount of Net Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income								Affected line item in the Statement of Operations
	Three Months Ended December 31,				Six Months Ended December 31,
	2022		2021		2022		2021
Derivatives in cash flow hedging relationships
Interest rate swaps	$	(1,089)	$	2,973	$	(692)	$	5,470		Interest expense, net
Cross-currency swaps	4,606		3,821		864		7,808			Other (expense) income, net
Total before income tax	3,517		6,794		172		13,278			(Loss) income before income taxes
Income tax	(381)		974		26		36			Income tax expense
Total	$	3,136	$	7,768	$	198	$	13,314

The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the three and six months ended December 31, 2022 and 2021 for derivative instruments for which we did not elect hedge accounting and de-designated derivative financial instruments that did not qualify as hedging instruments.


	Amount of Gain (Loss) Recognized in Net (Loss) Income								Affected line item in the Statement of Operations
	Three Months Ended December 31,				Six Months Ended December 31,
	2022		2021		2022		2021
Currency contracts	$	(24,196)	$	7,161	$	4,449	$	20,024		Other (expense) income, net
Interest rate swaps	—		(680)		—		(216)			Other (expense) income, net
Total	$	(24,196)	$	6,481	$	4,449	$	19,808