Fair Value Measurements

The Company considers fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company utilizes the following three-level fair value hierarchy to establish the priorities of the inputs used to measure fair value:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following table presents the Company’s financial assets and liabilities, that were accounted for at fair value, excluding assets related to the Company’s defined benefit pension plans, classified by the level within the fair value hierarchy (in thousands):



	June 30, 2015				March 31, 2015
	Level 1		Level 2		Level 1		Level 2
Cash equivalents:
Cash equivalents	$	217,225	$	—	$	264,647	$	—
	$	217,225	—		$	264,647	$	—
Trading investments for deferred compensation plan:
Money market funds	$	2,906	—		$	2,936	$	—
Mutual funds	14,444		—		14,301		—
	$	17,350	—		$	17,237	$	—
Foreign exchange derivative assets	$	—	$	63	$	—	$	2,080
Foreign exchange derivative liabilities	$	—	$	912	$	—	$	75

There were no material Level 3 financial assets as of June 30, 2015 or March 31, 2015.

Investment Securities

The marketable securities for the Company's deferred compensation plan are recorded at a fair value of $17.4 million and $17.2 million as of June 30, 2015 and March 31, 2015, respectively, based on quoted market prices. Quoted market prices are observable inputs that are classified as Level 1 within the fair value hierarchy. Unrealized trading gains / (losses) related to trading securities for the three months ended June 30, 2015 and 2014 were not significant and are included in other expense, net.

Derivative Financial Instruments

Under certain agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same type with a single net amount payable by one party to the other. However, the Company presents its derivative assets and derivative liabilities on a gross basis on the Condensed Consolidated Balance Sheets as of June 30, 2015 and March 31, 2015.

The following table presents the fair values of the Company’s derivative instruments and their accounting line presentation on its Condensed Consolidated Balance Sheets as of June 30, 2015 and March 31, 2015 (in thousands):



	Derivatives
	Asset				Liability
	June 30, 2015		March 31, 2015		June 30, 2015		March 31, 2015
Designated as hedging instruments:
Cash flow hedges	$	63	$	2,080	$	847	$	—
Not designated as hedging instruments:
Currency exchange contracts	—		—		65		75
	$	63	$	2,080	$	912	$	75

The following table presents the amounts of gains and losses on the Company’s derivative instruments and their locations on its condensed consolidated statements of operations and condensed consolidated statements of comprehensive income for the three months ended June 30, 2015 and 2014 (in thousands):



	Three Months Ended June 30,
	Amount of Gain (Loss) Deferred as a Component of Accumulated Other Comprehensive Loss After Reclassification to Costs of Goods Sold					Amount of Loss (Gain) Reclassified from Accumulated Other Comprehensive Loss to Costs of Goods Sold					Amount of Gain (Loss) Immediately Recognized in Other Expense, Net
	2015			2014		2015			2014		2015			2014
Designated as hedging instruments:
Cash flow hedges	$	(4,722	)	$	648	$	(2,460	)	$	400	$	68		$	(55	)
Not designated as hedging instruments:
Currency exchange contracts	—			—		—			—		(34		)	(419		)
	$	(4,722	)	$	648	$	(2,460	)	$	400	$	34		$	(474	)

Cash Flow Hedges

The Company enters into currency exchange forward contracts to hedge against exposure to changes in currency exchange rates related to its subsidiaries’ forecasted inventory purchases. The Company has one entity with a euro functional currency that purchases inventory in U.S. Dollars. The primary risk managed by using derivative instruments is the currency exchange rate risk. The Company has designated these derivatives as cash flow hedges. These hedging contracts mature within four months, and are denominated in the same currency as the underlying transactions. Gains and losses in the fair value of the effective portion of the hedges are deferred as a component of accumulated other comprehensive loss until the hedged inventory purchases are sold, at which time the gains or losses are reclassified to cost of goods sold. The Company assesses the effectiveness of the hedges by comparing changes in the spot rate of the currency underlying the forward contract with changes in the spot rate of the currency in which the forecasted transaction will be consummated. If the underlying transaction being hedged fails to occur or if a portion of the hedge does not generate offsetting changes in the currency exposure of forecasted inventory purchases, the Company immediately recognizes the gain or loss on the associated financial instrument in other expense, net. Such gains and losses were not material during the three months ended June 30, 2015 and 2014. Cash flows from such hedges are classified as operating activities in the condensed consolidated statements of cash flows. The notional amounts of currency exchange forward contracts outstanding related to forecasted inventory purchases were $79.7 million and $43.5 million at June 30, 2015 and March 31, 2015. The Company estimates that $0.8 million of net loss related to its cash flow hedges included in accumulated other comprehensive loss as of June 30, 2015 will be reclassified into earnings within the next 12 months.

Other Derivatives

The Company also enters into currency exchange forward and swap contracts to reduce the short-term effects of currency exchange rate fluctuations on certain foreign currency receivables or payables. These contracts generally mature within one month. The primary risk managed by using forward and swap contracts is the currency exchange rate risk. The gains or losses on currency exchange contracts are recognized in other expense, net based on the changes in fair value.

The notional amounts of currency exchange forward and swap contracts outstanding as of June 30 and March 31, 2015 relating to foreign currency receivables or payables were $52.0 million and $61.7 million, respectively. Open forward and swap contracts outstanding at June 30, 2015 and March 31, 2015 consisted of contracts in Mexican Pesos, Japanese Yen, British Pounds, Taiwanese Dollars and Australian Dollars to be settled at future dates at pre-determined exchange rates.

The fair value of all currency exchange forward and swap contracts is determined based on observable market transactions of spot currency rates and forward rates. Cash flows from these contracts are classified as operating activities in the Condensed Consolidated Statements of Cash Flows.