FOREIGN CURRENCY DERIVATIVES

3 Months Ended

Jun. 30, 2013

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 June 30, 2013.  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.

Refer to Note 4, Fair Value Measurements, for disclosure of the Company's fair value hierarchy for its derivative instruments.

Non-Designated Hedges

As of June 30, 2013, the Company had foreign currency forward contracts denominated in Euros ("EUR"), British Pound Sterling ("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 June 30, 2013:

	Local Currency		USD Equivalent		Position	Maturity
	(in thousands)		(in thousands)
EUR	€	16,000	$	20,808	Sell EUR	1 month
GBP	£	2,200	$	3,341	Sell GBP	1 month
AUD	A$	5,400	$	4,918	Sell AUD	1 month

Foreign currency transactions, net of the effect of forward contract hedging activity, resulted in immaterial net losses in the three ended June 30, 2013 and 2012. These immaterial net losses are included in interest and other income (expense), net in the condensed consolidated statements of operations.

Cash Flow Hedges

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 June 30, 2013, the Company had foreign currency option contracts of approximately €48.6 million and £20.1 million.  As of March 31, 2013, the Company had foreign currency option contracts of approximately €50.2 million and £19.9 million.

In the three months ended June 30, 2013, an immaterial loss on cash flow hedges was recognized in net revenues in the consolidated statement of operations, compared to a $1.9 million gain on cash flow hedges recognized in net revenues in the consolidated statements of operations for the three months ended June 30, 2012.  An immaterial gain, net of tax, in accumulated other comprehensive income ("AOCI") as of June 30, 2013 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 June 30, 2013 and March 31, 2013, the Company had foreign currency swap contracts of approximately MX$437.7 million and MX$325.4 million, respectively.

In the three months ended June 30, 2013 and 2012, 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 or losses in AOCI as of June 30, 2013 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 June 30, 2013:

	Local Currency		USD Equivalent		Position	Maturity
	(in thousands)		(in thousands)
MX$	$	437,700	$	33,411	Buy MX$	Monthly over	18 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 was as follows:

	Derivative Assets Reported in Other Current Assets				Derivative Liabilities Reported in Accrued Liabilities
	June 30,		March 31,		June 30,		March 31,
(in thousands)	2013		2013		2013		2013
Foreign exchange contracts designated as cash flow hedges	$	593	$	1,665	$	1,139	$	294

Effect of Designated Derivative Contracts on Accumulated Other Comprehensive Income

The following table represents the balance of designated derivative contracts as of June 30, 2013 and March 31, 2013, and the pre-tax impact of designated derivative contracts on AOCI for the three months ended June 30, 2013:

(in thousands)	Gain (loss) included in AOCI as of March 31, 2013		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 June 30, 2013
Foreign exchange contracts designated as cash flow hedges	$	1,371	$	(1,663	)	$	254	$	(546	)

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

The effect of designated derivative contracts on results of operations recognized in gross profit in the condensed consolidated statements of operations was as follows:

	Three Months Ended
	June 30,
(in thousands)	2013		2012
Gain on foreign exchange contracts designated as cash flow hedges	$	254	$	1,694

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

The effect of non-designated derivative contracts on results of operations recognized in interest and other income, net in the condensed consolidated statements of operations was as follows:

	Three Months Ended
	June 30,
(in thousands)	2013		2012
Gain on foreign exchange contracts	$	74	$	1,467