v3.26.3
Derivative Financial Instruments
 3 Months Ended
Sep. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure
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, fair value 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 previously had designated an intercompany loan as a net investment hedge, and any unrealized currency gains and losses on the loan were recorded in accumulated other comprehensive loss. 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, 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 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 September 30, 2026, we estimate that $8,380 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending September 30, 2027. As of September 30, 2026, we had six effective outstanding interest rate swap contracts that were indexed to Term or Daily SOFR. Our interest rate swap contracts have varying start and maturity dates through April 2028.
Interest rate swap contracts outstanding:Notional Amounts
Contracts accruing interest as of September 30, 2026 (1)
$350,000 
Contracts with a future start date80,000 
Total$430,000 
________________________
(1) Based on contracts outstanding as of September 30, 2026, the notional value of our contracted interest rate swaps accruing interest will fluctuate between $320,000 and $380,000 through April 2028 based on layered start dates and maturities.
Hedges of Currency Risk
Cross-Currency Swap Contracts
Cross-currency swap contracts designated as net investment hedges are executed to mitigate our currency exposure of net investments in subsidiaries that have reporting currencies other than the U.S. dollar. 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.
As of September 30, 2026, we had one outstanding cross-currency swap contract designated as a net investment hedge with a total notional amount of $254,547, maturing during September 2028. We entered into the cross-currency swap contract to hedge the risk of changes in the U.S. dollar equivalent value of a portion of our net investment in a consolidated subsidiary that has the Euro as its functional currency. Amounts reported in accumulated other comprehensive loss are recognized as a component of our cumulative translation adjustment.
Other Currency Hedges
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.
As of September 30, 2026, we had two currency forward contracts designated as net investment hedges with a notional amount of $75,874, with varying start and maturity dates through December 2027. The impact of net investment hedges is recognized in accumulated other comprehensive loss as a component of translation adjustments, net of hedges, and would only be reclassified to earnings if the hedged subsidiaries were no longer consolidated entities.
As of September 30, 2026, we had one currency forward contract designated as a fair value hedge with a notional amount of $151,094, maturing during June 2031. The periodic mark-to-market change in the spot exchange rate of fair value hedges is recognized in other income, net, which offsets the mark-to-market foreign currency revaluation of the underlying intercompany loan. We have elected to exclude the forward points component from the assessment of hedge effectiveness. Accordingly, the initial forward points component is recorded in accumulated other comprehensive loss and is amortized on a straight-line basis into other income, net over the life of the forward contract. Any subsequent mark-to-market changes related to the forward points component are recognized and retained in accumulated other comprehensive loss until the contract's maturity.
We have elected to not apply hedge accounting for all other currency forward and option contracts. During the three months ended September 30, 2026 and 2025, we experienced volatility within other 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 volatility in our GAAP results as a result of our currency hedging program.
In most cases, we enter into these currency derivative contracts, for which we do not apply hedge accounting, in order to address the risk for certain currencies where we have a net exposure to adjusted EBITDA, a non-GAAP financial metric. Adjusted EBITDA exposures are our focus for the majority of our mark-to-market currency forward and option contracts because a similar metric is referenced within the debt covenants of our amended and restated senior secured credit agreement (refer to Note 9 for additional information about this agreement). Our most significant net currency exposures by volume are the Euro and the British Pound (GBP). Our adjusted EBITDA hedging approach results in addressing nearly all of our forecasted Euro and GBP net exposures for the upcoming twelve months, with a declining hedged percentage out to twenty-four months. For certain other currencies with a smaller net impact, we hedge nearly all of our forecasted net exposures for the upcoming six months, with a declining hedge percentage out to fifteen months.
As of September 30, 2026, we had the following outstanding currency derivative contracts that were not designated for hedge accounting and were primarily used to hedge fluctuations in the U.S. dollar value of forecasted transactions or balances denominated in the Australian Dollar, Canadian Dollar, Czech Koruna, Danish Krone, Euro, GBP, Indian Rupee, Mexican Peso, New Zealand Dollar, Norwegian Krone, Philippine Peso, Swiss Franc and Swedish Krona:
Notional AmountEffective DateMaturity DateNumber of InstrumentsIndex
$1,001,965December 2024 through September 2026Various dates through September 2028631Various
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 September 30, 2026 and June 30, 2026. Our derivative asset and liability balances fluctuate with interest rate and currency exchange rate volatility.
September 30, 2026
Asset DerivativesLiability Derivatives
Balance Sheet line itemGross amounts of recognized assetsGross amount offset in Consolidated Balance SheetNet amountBalance Sheet line itemGross amounts of recognized liabilitiesGross amount offset in Consolidated Balance SheetNet amount
Derivatives designated as hedging instruments
Derivatives in cash flow hedging relationships
Interest rate swapsOther current assets / other assets$12,796 $— $12,796 Other current liabilities / other liabilities$— $— $— 
Derivatives in net investment hedging relationships
Cross-currency swapOther assets— — — Other liabilities(22,222)— (22,222)
Currency forward contractsOther current assets / other assets1,380 — 1,380 Other current liabilities / other liabilities— — — 
Derivatives in fair value hedging relationships
Currency forward contractsOther assets382 — 382 Other liabilities— — — 
Total derivatives designated as hedging instruments$14,558 $— $14,558 $(22,222)$— $(22,222)
Derivatives not designated as hedging instruments
Currency forward contractsOther current assets / other assets$20,180 $(8,757)$11,423 Other current liabilities / other liabilities$(2,898)$327 $(2,571)
Currency option contractsOther current assets— — — Other current liabilities(1,942)301 (1,641)
Total derivatives not designated as hedging instruments$20,180 $(8,757)$11,423 $(4,840)$628 $(4,212)
June 30, 2026
Asset DerivativesLiability Derivatives
Balance Sheet line itemGross amounts of recognized assetsGross amount offset in Consolidated Balance SheetNet amountBalance Sheet line itemGross amounts of recognized liabilitiesGross amount offset in Consolidated Balance SheetNet amount
Derivatives designated as hedging instruments
Derivatives in cash flow hedging relationships
Interest rate swapsOther current assets / other assets$10,951 $— $10,951 Other current liabilities / other liabilities$— $— $— 
Derivatives in net investment hedging relationships
Cross-currency swapOther assets— — — Other liabilities(24,566)— (24,566)
Currency forward contractsOther assets1,037 — 1,037 Other liabilities— — — 
Total derivatives designated as hedging instruments$11,988 $— $11,988 $(24,566)$— $(24,566)
Derivatives not designated as hedging instruments
Currency forward contractsOther current assets / other assets$14,221 $(9,175)$5,046 Other current liabilities / other liabilities$(3,300)$466 $(2,834)
Currency option contractsOther current assets / other assets— — — Other current liabilities / other liabilities(2,772)69 (2,703)
Total derivatives not designated as hedging instruments$14,221 $(9,175)$5,046 $(6,072)$535 $(5,537)
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 months ended September 30, 2026 and 2025:
Three Months Ended September 30,
20262025
Derivatives in cash flow hedging relationships
Interest rate swaps$3,080 $291 
Derivatives in net investment hedging relationships
Cross-currency swaps2,108 950 
Currency forward contracts1,052 205 
Derivatives in fair value hedging relationships
Currency forward contracts(490)— 
Total$5,750 $1,446 
The following table presents reclassifications out of accumulated other comprehensive loss for the three months ended September 30, 2026 and 2025:
Amount of Net (Gain) Loss Reclassified from Accumulated Other Comprehensive Loss into (Loss) IncomeAffected line item in the
Statement of Operations
Three Months Ended September 30,
20262025
Derivatives in cash flow hedging relationships
Interest rate swaps$(1,343)$(882)Interest expense, net
Derivatives in net investment hedging relationships
Currency forward contracts(267)— Interest expense, net
Total before income tax(1,610)(882)Income before income taxes
Income tax342 162 Income tax expense
Total$(1,268)$(720)
The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the three months ended September 30, 2026 and 2025 for derivative instruments for which we did not elect hedge accounting:
Amount of Gain (Loss) Recognized in Net (Loss) IncomeAffected line item in the
Statement of Operations
Three Months Ended September 30,
20262025
Currency contracts$6,554 $3,451 Other income, net
Total$6,554 $3,451