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 (“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 (gain) loss 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 (gain) loss in the Company's consolidated statements of operations.

The Company has foreign currency forward agreements and cross-currency swaps 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 $11,120,000 and all contracts mature by September 30, 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 $2,597,000 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 $10,098,000 and all contracts mature within twenty-seven months of March 31, 2012.

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 March 31, 2012.

The following is the effect of derivative instruments on the consolidated statement of operations for the years ended March 31, 2012, 2011, and 2010 (in thousands):


Derivatives Designated as Cash Flow Hedges (Foreign Exchange Contracts)	Amount of Gain or (Loss) Recognized in Other Comprehensive Income 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)
March 31,
2012	$ 24	Cost of products sold		$ 183
2011	217	Cost of products sold		38
2010	94	Cost of products sold		-

Derivatives Not Designated as Hedging Instruments (Foreign Exchange Contracts)	Location of (Gain) or Loss Recognized in Income on Derivatives		Amount of (Gain) or Loss Recognized in Income on Derivatives
March 31,
2012	Foreign currency exchange (gain) loss		$ (556)
2011	Foreign currency exchange (gain) loss		(209)
2010	Foreign currency exchange (gain) loss		(174)

As of March 31, 2012 and 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 consolidated balance sheet as of March 31, 2012 and 2011 (in thousands):

		Fair Value of Asset (Liability)
		March 31,
Derivatives Designated as Hedging Instruments	Balance Sheet Location	2012	2011
Foreign exchange contracts	Other Assets	$ 1	$ 85
Foreign exchange contracts	Accrued Liabilities	(324)	(439)

		Fair Value of Asset (Liability)
		March 31,
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	2012	2011
Foreign exchange contracts	Other Assets	$ 16	$ 3
Foreign exchange contracts	Accrued Liabilities	(502)	(1,046)