FOREIGN CURRENCY DERIVATIVES

9 Months Ended

Dec. 31, 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 assets as of December 31, 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.

The Company enters into master netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions. A master netting arrangement may allow each counterparty to net settle amounts owed between Plantronics and the counterparty as a result of multiple, separate derivative transactions. As of December 31, 2013, the Company has International Swaps and Derivatives Association (ISDA) agreements with three applicable banks and financial institutions which contain netting provisions. Plantronics has elected to present the fair value of derivative assets and liabilities within the Company's consolidated balance sheet on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. For each counterparty, if netted, the Company would offset the asset and liability balances of all derivatives at the end of the reporting period. Derivatives not subject to master netting agreements are not eligible for net presentation. As of December 31, 2013 and March 31, 2013, no cash collateral had been received or pledged related to these derivative instruments.

Refer to Note 4, Fair Value Measurements, for disclosure of the Company's fair value hierarchy for its derivative instruments and Note 11, AccumulatedOther Comprehensive Income, for further discussion.

Non-Designated Hedges

As of December 31, 2013, the Company had foreign currency forward contracts denominated in Euros ("EUR"), British Pound Sterling ("GBP"), and Australian Dollars ("AUD").  The Company does not elect to obtain hedge accounting for these forward contracts. 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 December 31, 2013:

(in thousands)	Local Currency		USD Equivalent		Position	Maturity
EUR	€	24,000	$	33,045	Sell EUR	1 month
GBP	£	1,300	$	2,144	Sell GBP	1 month
AUD	A$	3,350	$	2,971	Sell AUD	1 month

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						Nine Months Ended
	December 31,						December 31,
(in thousands)	2013			2012			2013			2012
Gain (loss) on foreign exchange contracts	$	(372	)	$	(618	)	$	(1,564	)	$	202

Cash Flow Hedges

On a monthly basis, the Company enters into option contracts with a one-year term.  The Company hedges a portion of the forecasted EUR and GBP denominated revenues with costless collars. The Company does not purchase options for trading purposes.  As of December 31, 2013, the Company had foreign currency option contracts of approximately €53.4 million and £22.2 million.  As of March 31, 2013, the Company had foreign currency option contracts of approximately €50.2 million and £19.9 million. A loss of $2.4 million, net of tax, in accumulated other comprehensive income ("AOCI") as of December 31, 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 a portion of the forecasted Mexican Peso (“MXN”) denominated expenditures with a cross-currency swap.  There were no material gains or losses in AOCI as of December 31, 2013 expected to be reclassified into cost of revenues during the next 12 months due to the recognition of the hedged forecasted expenditures. As of December 31, 2013 and March 31, 2013, the Company had foreign currency swap contracts of approximately MXN278.4 million and MXN325.4 million, respectively.

The following table summarizes the notional value of the Company’s outstanding MXN cross-currency swaps and approximate USD Equivalent at December 31, 2013:

(in thousands)	Local Currency	USD Equivalent		Position	Maturity
MXN	278,350	$	21,060	Buy MXN	Monthly over	12 months

Effect of Designated Derivative Contracts on AOCI and Condensed Consolidated Statements of Operations

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges on the accumulated other comprehensive income and condensed consolidated statements of income for the three and nine months ended December 31, 2013 and 2012:

	Three Months Ended December 31,						Nine Months Ended December 31,
(in thousands)	2013			2012			2013			2012
Gain (loss) included in AOCI as of beginning of period	$	(2,373	)	$	717		$	1,371		$	1,937
Amount of gain (loss) recognized in OCI (effective portion)	(222		)	(961		)	(3,869		)	587
Amount of gain (loss) reclassified from OCI into net revenues (effective portion)	(116		)	266			(262		)	3,329
Amount of gain (loss) reclassified from OCI into cost of revenues (effective portion)	(64		)	404			179			109
Total amount of gain (loss) reclassified from AOCI to income (loss) (effective portion)	(180		)	670			(83		)	3,438
Loss included in AOCI as of end of period	$	(2,415	)	$	(914	)	$	(2,415	)	$	(914	)