FOREIGN CURRENCY DERIVATIVES

6 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

FOREIGN CURRENCY DERIVATIVES

FOREIGN CURRENCY DERIVATIVES

The Company's foreign currency derivatives consist primarily of foreign currency forward exchange contracts, option contracts and cross-currency swaps.  The derivatives expose the Company to credit risk to the extent the counterparties may be unable to meet the terms of the derivative instrument.  The Company's maximum exposure to loss due to credit risk that it would incur if parties to derivative contracts failed completely to perform according to the terms of the contracts was equal to the carrying value of the Company's derivative contracts as of September 30, 2012.  The Company seeks to mitigate such risk by limiting its counterparties to large financial institutions.  In addition, the Company monitors the potential risk of loss with any one counterparty resulting from this type of credit risk on an ongoing basis.

Non-Designated Hedges

The Company enters into foreign exchange forward contracts to reduce the impact of foreign currency fluctuations on assets and liabilities denominated in currencies other than the functional currency of the reporting entity.  These foreign exchange forward contracts are not subject to the hedge accounting provisions of the Derivatives and Hedging Topic of the FASB ASC, but are carried at fair value with changes in the fair value recorded within Interest and other income (expense), net in the Condensed consolidated statements of operations in accordance with the Foreign Currency Matters Topic of the FASB ASC.  Gains and losses on these contracts are intended to offset the impact of foreign exchange rate changes on the underlying foreign currency denominated assets and liabilities, and therefore, do not subject the Company to material balance sheet risk.  The Company does not enter into foreign currency forward contracts for trading purposes. Refer to Note 6, Fair Value Measurements, for disclosure of the Company's fair value hierarchy for its derivative instruments.

As of September 30, 2012, the Company had foreign currency forward contracts denominated in Euros ("EUR"), Great Britain Pounds ("GBP") and Australian Dollars ("AUD").  These forward contracts hedge against a portion of the Company’s foreign currency-denominated cash balances, receivables and payables. The following table summarizes the notional value of the Company’s outstanding foreign exchange currency contracts and approximate U.S. Dollar ("USD") equivalent at September 30, 2012:

	Local Currency	USD Equivalent		Position	Maturity
	(in thousands)	(in thousands)
EUR	17,400	$	22,414	Sell EUR	1 month
GBP	1,600	$	2,582	Sell GBP	1 month
AUD	3,700	$	3,836	Sell AUD	1 month

Foreign currency transactions, net of the effect of forward contract hedging activity, resulted in immaterial net gains and immaterial net losses, respectively, in the three and six months ended September 30, 2012 and immaterial net losses in both the three and six months ended September 30, 2011, which are included in Interest and other income (expense), net in the Condensed consolidated statements of operations.

Cash Flow Hedges

The Company’s hedging activities include a hedging program to hedge the economic exposure from anticipated EUR and GBP denominated sales.  The Company hedges a portion of these forecasted foreign denominated sales with currency options.  These transactions are designated as cash flow hedges and are accounted for under the hedge accounting provisions of the Derivatives and Hedging Topic of the FASB ASC.  The effective portion of the hedge gain or loss is initially reported as a component of Accumulated other comprehensive income ("AOCI") and subsequently reclassified into Net revenues when the hedged exposure affects earnings.  Any ineffective portion of related gains or losses is recorded in the Condensed consolidated statements of operations immediately.  On a monthly basis, the Company enters into option contracts with a one-year term.  The Company does not purchase options for trading purposes.  As of September 30, 2012, the Company had foreign currency put and call option contracts of approximately €55.8 million and £19.8 million.  As of March 31, 2012, the Company had foreign currency put and call option contracts of approximately €63.7 million and £20.0 million.

In the three and six months ended September 30, 2012, realized gains on cash flow hedges of $1.2 million and $3.1 million, respectively, were recognized in Net revenues, compared to immaterial losses and losses of $2.6 million for the three and six month periods in the prior year, respectively. An immaterial loss, net of tax, in AOCI as of September 30, 2012 is expected to be reclassified to Net revenues during the next 12 months due to the recognition of the hedged forecasted sales.

The Company hedges expenditures denominated in Mexican Peso (“MX$”), which are designated as cash flow hedges and are accounted for under the hedge accounting provisions of the Derivatives and Hedging Topic of the FASB ASC.  The Company hedges a portion of the forecasted MX$ denominated expenditures with a cross-currency swap.  The effective portion of the hedge gain or loss is initially reported as a component of AOCI and subsequently reclassified into Cost of revenues when the hedged exposure affects operations.  Any ineffective portion of related gains or losses is recorded in the Condensed consolidated statements of operations immediately.  As of September 30, 2012 and March 31, 2012, the Company had foreign currency swap contracts of approximately MX$159.2 million and MX$317.5 million, respectively.

In the three and six months ended September 30, 2012 and 2011, there were no material realized gains or losses on MX$ cash flow hedges recognized in Cost of revenues in the Condensed consolidated statement of operations and there were no material gains in AOCI as of September 30, 2012 to be recognized during the next 12 months due to the recognition of the hedged forecasted expenditures.  

The following table summarizes the notional value of the Company’s outstanding MX$ cross-currency swaps and approximate USD Equivalent at September 30, 2012:

	Local Currency	USD Equivalent		Position	Maturity
	(in thousands)	(in thousands)
MX$	159,200	$	11,438	Buy MX$	Monthly over	6 months

The amounts in the tables below include fair value adjustments related to the Company’s own credit risk and counterparty credit risk.

Fair Value of Derivative Contracts

The fair value of derivative contracts under the Derivatives and Hedging Topic of the FASB ASC was as follows:

	Derivative Assets Reported in Other Current Assets				Derivative Liabilities Reported in Accrued Liabilities
	September 30,		March 31,		September 30,		March 31,
(in thousands)	2012		2012		2012		2012
Foreign exchange contracts designated as cash flow hedges	$	1,726	$	2,658	$	1,009	$	721

Effect of Designated Derivative Contracts on Accumulated Other Comprehensive Income

The following table represents only the balance of designated derivative contracts under the Derivatives and Hedging Topic of the FASB ASC as of September 30, 2012 and March 31, 2012, and the pre-tax impact of designated derivative contracts on AOCI for the six months ended September 30, 2012:

(in thousands)	Gain (loss) included in AOCI as of March 31, 2012		Amount of gain (loss) recognized in AOCI (effective portion)		Amount of gain (loss) reclassified from AOCI to income (loss) (effective portion)		Gain (loss) included in AOCI as of September 30, 2012
Foreign exchange contracts designated as cash flow hedges	$	1,937	$	1,548	$	2,768	$	717

Effect of Designated Derivative Contracts on the Condensed Consolidated Statements of Operations

The effect of designated derivative contracts under the Derivatives and Hedging Topic of the FASB ASC on results of operations recognized in Gross profit in the Condensed consolidated statements of operations was as follows:

	Three Months Ended					Six Months Ended
	September 30,					September 30,
(in thousands)	2012		2011			2012		2011
Gain (loss) on foreign exchange contracts designated as cash flow hedges	$	1,074	$	(404	)	$	2,768	$	(2,018	)

Effect of Non-Designated Derivative Contracts on the Condensed Consolidated Statements of Operations

The effect of non-designated derivative contracts under the Derivatives and Hedging Topic of the FASB ASC on results of operations recognized in Interest and other income (expense), net in the Condensed consolidated statements of operations was as follows:

	Three Months Ended					Six Months Ended
	September 30,					September 30,
(in thousands)	2012			2011		2012		2011
Gain (loss) on foreign exchange contracts	$	(648	)	$	2,096	$	819	$	1,299