NetScout operates internationally and, in the normal course of business, is exposed to fluctuations in foreign currency exchange rates. The exposures result from costs that are denominated in currencies other than the U.S. Dollar, primarily the Euro, British Pound, Canadian Dollar, and Indian Rupee. The Company manages its foreign cash flow risk by hedging forecasted cash flows for operating expenses denominated in foreign currencies for up to twelve months, within specified guidelines through the use of forward contracts. The Company enters into foreign currency exchange contracts to hedge cash flow exposures from costs that are denominated in currencies other than the U.S. Dollar. These hedges are designated as cash flow hedges at inception.

NetScout also periodically enters into forward contracts to manage exchange rate risks associated with certain third-party transactions and for which the Company does not elect hedge accounting treatment as there is no difference in the timing of gain or loss recognition on the hedging instrument and the hedged item.

All of the Company's derivative instruments are utilized for risk management purposes, and the Company does not use derivatives for speculative trading purposes. These contracts will mature over the next twelve months and are expected to impact earnings on or before maturity.

The notional amounts and fair values of derivative instruments in the consolidated balance sheets at December 31, 2022 and March 31, 2022 were as follows (in thousands):


	Notional Amounts (a)				Prepaid Expenses and Other Current Assets				Accrued Other
	December 31, 2022		March 31, 2022		December 31, 2022		March 31, 2022		December 31, 2022		March 31, 2022
Derivatives Designated as Hedging Instruments:
Forward contracts	$	11,955	$	5,578	$	40	$	20	$	188	$	78


					$	40	$	20	$	188	$	78

The following table provides the effect that foreign exchange forward contracts designated as hedging instruments had on other comprehensive income (OCI) and results of operations for the three months ended December 31, 2022 and 2021 (in thousands):


	Gain Recognized in OCI on Derivative (a)				Gain (Loss) Reclassified from Accumulated OCI into Income (b)
	December 31, 2022		December 31, 2021		Location	December 31, 2022		December 31, 2021
Forward contracts	$	611	$	30	Research and development	$	30	$	(2)
					Sales and marketing	97		40
	$	611	$	30		$	127	$	38

The following table provides the effect that foreign exchange forward contracts designated as hedging instruments had on other comprehensive income (OCI) and results of operations for the nine months ended December 31, 2022 and 2021 (in thousands):


	Gain (Loss) Recognized in OCI on Derivative (a)				Gain (Loss) Reclassified from Accumulated OCI into Income (b)
	December 31, 2022		December 31, 2021		Location	December 31, 2022		December 31, 2021
Forward contracts	$	(582)	$	158	Research and development	$	49	$	(17)
					Sales and marketing	452		(11)
	$	(582)	$	158		$	501	$	(28)

The following table provides the effect that foreign exchange forward contracts not designated as hedging instruments had on the Company's results of operations for the nine months ended December 31, 2022 and 2021 (in thousands):


	Loss Recognized in Income (a)
	Location	December 31, 2022		December 31, 2021
Forward contracts	General and administrative	$	—	$	(248)
		$	—	$	(248)