XML 58 R15.htm IDEA: XBRL DOCUMENT v2.4.1.9
Fair Value Measurements
9 Months Ended
Dec. 31, 2014
Financial Instruments, Owned, at Fair Value [Abstract]  
Fair Value Measurements
Fair Value Measurements
 
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 uses 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): 
 
 
December 31, 2014
 
March 31, 2014
 
 
Level 1
 
Level 2
 
Level 1
 
Level 2
Cash equivalents:
 
 

 
 
 
 

 
 

Cash equivalents
 
$
274,552

 
$

 
$
200,641

 
$

 
 
$
274,552

 

 
$
200,641

 
$

Trading investments for deferred compensation plan:
 
 

 
 
 
 

 
 

Money market funds
 
$
2,981

 

 
$
3,139

 
$

Mutual funds
 
14,502

 

 
13,472

 

 
 
$
17,483

 

 
$
16,611

 
$

Foreign exchange derivative assets
 
$

 
$
697

 
$

 
$
155

Foreign exchange derivative liabilities
 
$

 
$
38

 
$

 
$
701


 
There were no significant Level 3 financial assets as of December 31, 2014 or March 31, 2014.
 
Cash and Cash Equivalents
 
Cash equivalents consist of bank demand deposits and time deposits. The time deposits have original maturities of three months or less. Cash equivalents are carried at cost, which approximates fair value.
 
Investment Securities
 
The Company’s investment securities portfolio consists of marketable securities (money market and mutual funds) related to a deferred compensation plan at December 31, 2014 and March 31, 2014.
 
The marketable securities related to the deferred compensation plan are classified as non-current assets. Since participants in the deferred compensation plan may select the mutual funds in which their compensation deferrals are invested within the confines of the Rabbi Trust, which holds the marketable securities, the Company has designated these marketable securities as trading investments, although there is no intent to actively buy and sell securities within the objective of generating profits on short-term difference in market prices. Management has classified the investments as non-current assets because final sale of the investments or realization of proceeds by plan participants is not expected within the Company’s normal operating cycle of one year. The marketable securities are recorded at a fair value of $17.5 million and $16.6 million as of December 31, 2014 and March 31, 2014, respectively, based on quoted market prices. Quoted market prices are observable inputs that are classified as Level 1 securities. Earnings, gains and losses on trading investments are included in other income (expense), net.
 
Derivative Financial Instruments
 
Under the agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company does not net settle transactions with any single net amount payable by one party to the other. In accordance with ASU 2011-11, the Company presents its derivative instruments at gross fair values in the Consolidated Balance Sheets as of December 31, 2014 and March 31, 2014.

The following table presents the fair values of the Company’s derivative instruments and their accounting line presentation on its Consolidated Balance Sheets as of December 31, 2014 and March 31, 2014 (in thousands):
 
 
Derivatives
 
 
Asset
 
Liability
 
 
December 31,
2014
 
March 31,
2014
 
December 31,
2014
 
March 31,
2014
Designed as hedging instruments:
 
 

 
 

 
 

 
 

Cash flow hedges
 
$
693

 
$
4

 
$

 
$
243

Not designed as hedging instruments:
 
 

 
 

 
 

 
 

Foreign exchange contracts
 
4

 
151

 
38

 
458

 
 
$
697

 
$
155

 
$
38

 
$
701


 
The following table presents the amounts of gains and losses on the Company’s derivative instruments for the three and nine months ended December 31, 2014 and 2013 (in thousands):
 
 
Three Months Ended
December 31,
 
 
Net Amount of
Gain (Loss) Deferred as a
Component of Accumulated
Other Comprehensive Income
 
Amount of Loss (Gain)
Reclassified from Accumulated
Other Comprehensive Income to
Costs of Goods Sold
 
Amount of Gain (Loss)
Immediately Recognized in
Other Income (Expense), Net
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Designed as hedging instruments:
 
 

 
 

 
 

 
 

 
 

 
 

Cash flow hedges
 
$
(739
)
 
$
144

 
$
(2,025
)
 
$
1,342

 
$
36

 
$
8

Not designed as hedging instruments:
 
 

 
 

 
 

 
 

 
 

Foreign exchange contracts
 

 

 

 

 
1,585

 
899

 
 
$
(739
)
 
$
144

 
$
(2,025
)
 
$
1,342

 
$
1,621

 
$
907

 
 
 
Nine Months Ended
December 31,
 
 
Net Amount of
Gain (Loss) Deferred as a
Component of Accumulated
Other Comprehensive Income
 
Amount of Loss (Gain)
Reclassified from Accumulated
Other Comprehensive Income to
Costs of Goods Sold
 
Amount of Gain (Loss)
Immediately Recognized in
Other Income (Expense), Net
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Designed as hedging instruments:
 
 

 
 

 
 

 
 

 
 

 
 

Cash flow hedges
 
$
3,198

 
$
(1,958
)
 
$
(1,840
)
 
$
1,526

 
$
(20
)
 
$
54

Not designed as hedging instruments:
 
 

 
 

 
 

 
 

 
 

Foreign exchange contracts
 

 

 

 

 
1,908

 
1,807

 
 
$
3,198

 
$
(1,958
)
 
$
(1,840
)
 
$
1,526

 
$
1,888

 
$
1,861


 
Cash Flow Hedges
 
The Company enters into foreign exchange forward contracts to hedge against exposure to changes in foreign 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 foreign currency exchange rate risk. The Company has designated these derivatives as cash flow hedges. The Company does not use derivative financial instruments for trading or speculative purposes. 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 foreign currency exposure of forecasted inventory purchases, the Company immediately recognizes the gain or loss on the associated financial instrument in other income (expense). Such gains and losses were immaterial during the three and nine months ended December 31, 2014 and 2013. Cash flows from such hedges are classified as operating activities in the consolidated statements of cash flows. The notional amounts of foreign exchange forward contracts outstanding related to forecasted inventory purchases were $41.4 million (€33.9 million) and $51.8 million (€37.6 million) at December 31, 2014 and March 31, 2014. The notional amount represents the future cash flows under contracts to purchase foreign currencies.
 
Other Derivatives
 
The Company also enters into foreign exchange forward and swap contracts to reduce the short-term effects of foreign currency fluctuations on certain foreign currency receivables or payables. These contracts generally have one month maturity. The primary risk managed by using forward and swap contracts is the foreign currency exchange rate risk. The gains or losses on foreign exchange contracts are recognized in other income (expense), net based on the changes in fair value.
 
The notional amounts of foreign exchange contracts outstanding as of December 31 and March 31, 2014 relating to foreign currency receivables or payables were $42.7 million and $53.6 million, respectively. The contracts outstanding at December 31, 2014 and March 31, 2014 consisted of contracts in Mexican pesos, Japanese yen, British pounds, Taiwanese dollars and Australian dollars.
 
The fair value of all foreign exchange forward contracts and foreign exchange 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 Consolidated Statements of Cash Flows.