Derivative Instruments

6 Months Ended

Sep. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

The Company uses derivative instruments to manage selected foreign currency exposures. The Company does not use derivative instruments for speculative trading purposes. All derivative instruments must be recorded on the balance sheet at fair value. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is recorded as accumulated other comprehensive gain (loss), or “AOCL”, and is reclassified to earnings when the underlying transaction has an impact on earnings. The ineffective portion of changes in the fair value of the derivative is reported in foreign currency exchange loss (gain) in the Company’s condensed consolidated statement of operations and retained earnings. For derivatives not classified as cash flow hedges, all changes in market value are recorded as a foreign currency exchange loss (gain) in the Company’s condensed consolidated statements of operations and retained earnings.

The Company has foreign currency forward agreements in place to hedge changes in the value of recorded foreign currency liabilities due to changes in foreign exchange rates at the settlement date. The notional amount of those derivatives is $3,532,000 and all contracts mature within twelve months. These contracts are marked to market each balance sheet date and are not designated as hedges.

The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases and sales, including multi-year contracts related to capital project sales, denominated in a foreign currency. The notional amount of those derivatives is $8,053,000 and all contracts mature within twelve months of September 30, 2013.

The Company is exposed to credit losses in the event of non performance by the counterparties on its financial instruments. All counterparties have investment grade credit ratings. The Company anticipates that these counterparties will be able to fully satisfy their obligations under the contracts. The Company has derivative contracts with three different counterparties as of September 30, 2013.

The following is the effect of derivative instruments on the condensed consolidated statement of operations and retained earnings for the three months ended September 30, 2013 and 2012 (in thousands):

September 30,	Derivatives Designated as Cash Flow  Hedges	Amount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives (Effective Portion)			Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Reclassified from AOCL into Income (Effective Portion)
2013	Foreign exchange contracts	$	25		Cost of products sold	$	(80	)
2012	Foreign exchange contracts	(68		)	Cost of products sold	24

September 30,	Derivatives Not Designated as Hedging Instruments	Location of Gain Recognized in Income on Derivatives	Amount of Gain Recognized in Income on Derivatives
2013	Foreign exchange contracts	Foreign currency exchange gain	$	(60	)
2012	Foreign exchange contracts	Foreign currency exchange gain	(77		)

The following is the effect of derivative instruments on the condensed consolidated statement of operations and retained earnings for the six months ended September 30, 2013 and 2012 (in thousands):

September 30,	Derivatives Designated as Cash Flow  Hedges	Amount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives (Effective Portion)			Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Reclassified from AOCL into Income (Effective Portion)
2013	Foreign exchange contracts	$	116		Cost of products sold	$	(75	)
2012	Foreign exchange contracts	(73		)	Cost of products sold	116

September 30,	Derivatives Not Designated as Hedging Instruments	Location of Gain Recognized in Income on Derivatives	Amount of Gain Recognized in Income on Derivatives
2013	Foreign exchange contracts	Foreign currency exchange gain	$	70
2012	Foreign exchange contracts	Foreign currency exchange gain	534

As of September 30, 2013, the Company had no derivatives designated as net investments or fair value hedges in accordance with ASC Topic 815, “Derivatives and Hedging.”

The following is information relative to the Company’s derivative instruments in the condensed consolidated balance sheet as of September 30, 2013 (in thousands):

		Fair Value of Asset (Liability)
Derivatives Designated as Hedging Instruments	Balance Sheet Location	September 30, 2013			March 31, 2013
Foreign exchange contracts	Other Assets	$	63		$	8
Foreign exchange contracts	Accrued Liabilities	$	(207	)	$	(511	)
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	September 30, 2013			March 31, 2013
Foreign exchange contracts	Other Assets	$	—		$	95
Foreign exchange contracts	Accrued Liabilities	$	(78	)	$	(104	)