Derivative Instruments (Tables)

9 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedges, Assets [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

8.    Derivative Instruments

The Company uses derivative instruments to manage selected foreign currency and interest rate exposures. The Company does not use derivative instruments for speculative trading purposes. All derivative instruments must be recorded on the balance sheet at fair value. For derivatives designated as cash flow hedges, changes in the fair value of the derivative is recorded as accumulated other comprehensive loss, or “AOCL,” and is reclassified to earnings when the underlying transaction has an impact on earnings. For foreign currency derivatives not designated as cash flow hedges, all changes in market value are recorded as a foreign currency exchange loss (gain) in the Company’s Consolidated Statements of Operations. The cash flow effects of derivatives are reported within net cash (used for) provided by operating activities on the Condensed Consolidated Statements of Cash Flows.

The Company is exposed to credit losses in the event of non-performance by the counterparties on its financial instruments. The counterparties have investment grade credit ratings. The Company anticipates that these counterparties will be able to fully satisfy their obligations under the contracts. The Company has derivative contracts with three counterparties as of December 31, 2019.

The Company's agreements with its counterparties contain provisions pursuant to which the Company could be declared in default of its derivative obligations. As of December 31, 2019, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of December 31, 2019, it could have been required to settle its obligations under these agreements at amounts which approximate the December 31, 2019 fair values reflected in the table below. During the nine months ended December 31, 2019, the Company was not in default of any of its derivative obligations.

As of December 31, 2019, the Company had no derivatives designated as net investments or fair value hedges in accordance with ASC Topic 815, “Derivatives and Hedging.”

The Company has cross currency swap agreements that are designated as cash flow hedges to hedge changes in the value of intercompany loans to a foreign subsidiary due to changes in foreign exchange rates. These intercompany loans are related to the acquisition of STAHL. The notional amount of these derivatives is $185,608,000, and all of the contracts mature by January 31, 2022. From its December 31, 2019 balance of AOCL, the Company expects to reclassify approximately $983,000 out of AOCL, and into foreign currency exchange loss (gain), during the next 12 months based on the contractual payments due under these intercompany loans.

The Company has a foreign currency forward agreement in place to offset the change in the value of another intercompany loan to a foreign subsidiary due to a change in a foreign exchange rate. The notional amount of this derivative is $1,527,000, and this contract matures by March 31, 2020. This contract is marked to market each balance sheet date and is not designated as a hedge.

The Company has foreign currency forward agreements that are designated as cash flow hedges to hedge a portion of forecasted inventory purchases denominated in foreign currencies. The notional amount of those derivatives is $9,922,000, and all contracts mature by September 30, 2020. From its December 31, 2019 balance of AOCL, the Company expects to reclassify approximately $97,000 out of AOCL during the next 12 months based on the expected sales of the goods purchased.

The Company's policy is to maintain a capital structure that is comprised of 50-70% of fixed rate long term debt and 30-50% of variable rate long term debt. The Company has two interest rate swap agreements in which the Company receives interest at a variable rate and pays interest at a fixed rate. These interest rate swap agreements are designated as cash flow hedges to hedge changes in interest expense due to changes in the variable interest rate of the senior secured term loan. The amortizing interest rate swaps mature by December 31, 2023 and have a total notional amount of $173,558,000 as of December 31, 2019. The changes in fair values of the interest rate swaps is reported in AOCL and will be reclassified to interest expense over the life of the swap agreements. From its December 31, 2019 balance of AOCL, the Company expects to reclassify approximately $386,000 out of AOCL, and into interest expense, during the next 12 months.

The following is the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three months ended December 31, 2019 and 2018 (in thousands):

Derivatives Designated as Cash Flow Hedges	Type of Instrument	Amount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives			Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Reclassified from AOCL into Income
December 31, 2019	Foreign exchange contracts	$	(90	)	Cost of products sold	$	49
December 31, 2019	Interest rate swaps	207			Interest expense	—
December 31, 2019	Cross currency swaps	(3,218		)	Foreign currency exchange (gain) loss	(4,012		)
December 31, 2018	Foreign exchange contracts	300			Cost of products sold	42
December 31, 2018	Interest rate swap	(1,741		)	Interest expense	159
December 31, 2018	Cross currency swaps	3,944			Foreign currency exchange (gain) loss	2,213

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives
December 31, 2019	Foreign currency exchange (gain) loss	$	20
December 31, 2018	Foreign currency exchange (gain) loss	52

The following is the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the nine months ended December 31, 2019 and 2018 (in thousands):

Derivatives Designated as Cash Flow Hedges	Type of Instrument	Amount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives			Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Reclassified from AOCL into Income
December 31, 2019	Foreign exchange contracts	$	(41	)	Cost of products sold	$	57
December 31, 2019	Interest rate swaps	(1,519		)	Interest expense	359
December 31, 2019	Cross currency swaps	2,386			Foreign currency exchange (gain) loss	512
December 31, 2018	Foreign exchange contracts	103			Cost of products sold	(58		)
December 31, 2018	Interest rate swap	(374		)	Interest expense	407
December 31, 2018	Cross currency swaps	13,591			Foreign currency exchange (gain) loss	13,590

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives
December 31, 2019	Foreign currency exchange (gain) loss	$	13
December 31, 2018	Foreign currency exchange (gain) loss	45

The following is information relative to the Company’s derivative instruments in the Condensed Consolidated Balance Sheets (in thousands):

		Fair Value of Asset (Liability)
Derivatives Designated as Hedging Instruments	Balance Sheet Location	December 31, 2019			March 31, 2019
Foreign exchange contracts	Prepaid expenses and other	$	—		$	43
Foreign exchange contracts	Accrued liabilities	(150		)	(96		)
Interest rate swap	Prepaid expenses and other	—			743
Interest rate swap	Other assets	—			470
Interest rate swap	Accrued liabilities	(507		)	—
Interest rate swap	Other non current liabilities	(751		)	—
Cross currency swap	Prepaid expenses and other	1,485			2,476
Cross currency swap	Accrued liabilities	(173		)	(774		)
Cross currency swap	Other non current liabilities	(11,839		)	(15,410		)
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	December 31, 2019			March 31, 2019
Foreign exchange contracts	Accrued Liabilities	(5		)	(17		)

Derivative Instruments, Gain (Loss) [Line Items]

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The following is the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three months ended December 31, 2019 and 2018 (in thousands):

Derivatives Designated as Cash Flow Hedges	Type of Instrument	Amount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives			Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Reclassified from AOCL into Income
December 31, 2019	Foreign exchange contracts	$	(90	)	Cost of products sold	$	49
December 31, 2019	Interest rate swaps	207			Interest expense	—
December 31, 2019	Cross currency swaps	(3,218		)	Foreign currency exchange (gain) loss	(4,012		)
December 31, 2018	Foreign exchange contracts	300			Cost of products sold	42
December 31, 2018	Interest rate swap	(1,741		)	Interest expense	159
December 31, 2018	Cross currency swaps	3,944			Foreign currency exchange (gain) loss	2,213

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives
December 31, 2019	Foreign currency exchange (gain) loss	$	20
December 31, 2018	Foreign currency exchange (gain) loss	52

The following is the effect of derivative instruments on the Condensed Consolidated Statements of Operations for the nine months ended December 31, 2019 and 2018 (in thousands):

Derivatives Designated as Cash Flow Hedges	Type of Instrument	Amount of Gain or (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives			Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Reclassified from AOCL into Income
December 31, 2019	Foreign exchange contracts	$	(41	)	Cost of products sold	$	57
December 31, 2019	Interest rate swaps	(1,519		)	Interest expense	359
December 31, 2019	Cross currency swaps	2,386			Foreign currency exchange (gain) loss	512
December 31, 2018	Foreign exchange contracts	103			Cost of products sold	(58		)
December 31, 2018	Interest rate swap	(374		)	Interest expense	407
December 31, 2018	Cross currency swaps	13,591			Foreign currency exchange (gain) loss	13,590

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives
December 31, 2019	Foreign currency exchange (gain) loss	$	13
December 31, 2018	Foreign currency exchange (gain) loss	45

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following is information relative to the Company’s derivative instruments in the Condensed Consolidated Balance Sheets (in thousands):

		Fair Value of Asset (Liability)
Derivatives Designated as Hedging Instruments	Balance Sheet Location	December 31, 2019			March 31, 2019
Foreign exchange contracts	Prepaid expenses and other	$	—		$	43
Foreign exchange contracts	Accrued liabilities	(150		)	(96		)
Interest rate swap	Prepaid expenses and other	—			743
Interest rate swap	Other assets	—			470
Interest rate swap	Accrued liabilities	(507		)	—
Interest rate swap	Other non current liabilities	(751		)	—
Cross currency swap	Prepaid expenses and other	1,485			2,476
Cross currency swap	Accrued liabilities	(173		)	(774		)
Cross currency swap	Other non current liabilities	(11,839		)	(15,410		)
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	December 31, 2019			March 31, 2019
Foreign exchange contracts	Accrued Liabilities	(5		)	(17		)