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 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 consolidated statement of operations. 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 consolidated statements of operations.

The Company has foreign currency forward agreements and a cross-currency swap in place to offset changes in the value of intercompany loans to certain foreign subsidiaries due to changes in foreign exchange rates. The notional amount of these derivatives is $12,317,000 as of December 31, 2011 and all contracts mature by September 2013. These contracts are not designated as hedges.

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 $2,613,000 as of December 31, 2011 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 foreign currencies. The notional amount of those derivatives is $9,213,000 as of December 31, 2011 and all contracts mature within thirty-three months of December 31, 2011.

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 four different counterparties as of December 31, 2011.

The following is the effect of derivative instruments on the condensed consolidated statement of operations for the nine months ended December 31, 2011 (in thousands):

Derivatives Designated as Cash Flow Hedges		Amount of Gain Recognized in Other Comprehensive Loss on Derivatives (Effective Portion)		Location of Gain or (Loss) Recognized in Income on Derivatives		Amount of Gain Reclassified from AOCL into Income (Effective Portion)
Foreign exchange contracts	$	171		Cost of products sold	$	138

Derivatives Not Designated as Hedging Instruments		Location of Gain Recognized in Income on Derivatives		Amount of Gain Recognized in Income on Derivatives
Foreign exchange contracts		Foreign currency exchange gain	$	987

As of December 31, 2011, 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 December 31, 2011 (in thousands):


Derivatives Designated as Hedging Instruments	Balance Sheet Location		Fair Value of Asset (Liability)
Foreign exchange contracts	Other Assets	$	147
Foreign exchange contracts	Accrued Liabilities	$	(66)

Derivatives Not Designated as Hedging Instruments	Balance Sheet Location		Fair Value of Asset (Liability)
Foreign exchange contracts	Other Assets	$	33
Foreign exchange contracts	Accrued Liabilities	$	(89)