Derivatives Instruments

9 Months Ended

Dec. 31, 2013

Derivatives Instruments [Abstract]

Derivatives Instruments

Note 16: Derivatives Instruments

Modine uses derivative financial instruments from time to time, as a tool to manage certain financial risks.  Leveraged derivatives are prohibited by Company policy. Accounting for derivatives and hedging activities requires derivative financial instruments to be measured at fair value and recognized as assets or liabilities in the consolidated balance sheets.  Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instruments depends on whether it has been designated, and is effective, as a hedge and, if so, on the nature of the hedging activity.

Commodity Derivatives:  The Company has, from time to time, entered into futures contracts related to certain forecasted purchases of aluminum and copper.  The Company’s strategy in entering into these contracts is to reduce its exposure to changing market prices for future purchases of these commodities.  The Company has not designated commodity contracts entered into beginning in fiscal 2013 for hedge accounting. Accordingly, unrealized gains and losses on those contracts are recorded within cost of sales. The Company designated contracts entered into prior to fiscal 2013 for hedge accounting. Accordingly, the amounts recorded in accumulated other comprehensive (loss) income (“AOCI”) related to those contracts will remain in AOCI until the underlying commodity purchases impact earnings.

Foreign exchange contracts:  The Company’s foreign exchange risk management strategy uses derivative financial instruments in a limited way to mitigate foreign currency exchange risk.  The Company periodically enters into foreign currency exchange contracts to hedge specific foreign currency denominated assets and liabilities.  The Company has not designated these contracts for hedge accounting.  Accordingly, unrealized gains and losses related to the change in fair value are recorded in other income and expense.  Gains and losses on these foreign currency contracts are offset by foreign currency gains and losses associated with the related assets and liabilities.

The fair value of the Company’s derivative financial instruments recorded in the consolidated balance sheets were as follows:

	Balance Sheet Location	December 31, 2013		March 31, 2013
Derivative instruments:
Commodity derivatives	Other current assets	$	0.1	$	-
Foreign exchange contracts	Other current liabilities		-		0.1
Commodity derivatives	Other current liabilities		0.2		1.2
Commodity derivatives	Other noncurrent liabilities		0.1		0.1

The amounts recorded in AOCI and in the consolidated statements of operations for all of the Company’s derivative financial instruments were as follows:

				Three months ended					Nine months ended
				December 31, 2013					December 31, 2013
	Amount of Loss Recognized in AOCI		Statement of Operations Location	Loss Reclassified from AOCI into Earnings (Loss)		Total Loss (Gain) Recognized in Earnings (Loss)			Loss Reclassified from AOCI into Earnings (Loss)		Total Loss (Gain) Recognized in Earnings (Loss)
Commodity derivatives	$	0.2	Cost of sales	$	0.1	$	0.2		$	0.3	$	0.4
Foreign exchange contracts		-	Other expense - net		-		(0.1	)		-		(0.3	)
Total	$	0.2		$	0.1	$	0.1		$	0.3	$	0.1
				Three months ended					Nine months ended
				December 31, 2012					December 31, 2012
	Amount of Loss Recognized in AOCI		Statement of Operations Location	Loss Reclassified from AOCI into Earnings (Loss)		Total Loss (Gain) Recognized in Earnings (Loss)			Loss Reclassified from AOCI into Earnings (Loss)		Total Loss (Gain) Recognized in Earnings (Loss)
Commodity derivatives	$	0.7	Cost of sales	$	0.7	$	1.1		$	2.4	$	3.8
Foreign exchange contracts		-	Other expense - net		-		(0.2	)		-		(0.3	)
Total	$	0.7		$	0.7	$	0.9		$	2.4	$	3.5