Derivative Financial Instruments

6 Months Ended

Oct. 01, 2017

Text Block [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company utilizes derivative instruments to reduce its exposure to fluctuations in commodity prices and foreign exchange rates under established procedures and controls. The Company does not enter into derivative contracts for speculative purposes. The Company’s agreements are with creditworthy financial institutions and the Company anticipates performance by counterparties to these contracts and therefore no material loss is expected.

Derivatives in Cash Flow Hedging Relationships

Lead Forward Contracts

The Company enters into lead forward contracts to fix the price for a portion of its lead purchases. Management considers the lead forward contracts to be effective against changes in the cash flows of the underlying lead purchases. The vast majority of such contracts are for a period not extending beyond one year. At October 1, 2017 and March 31, 2017, the Company has hedged the price to purchase approximately 50.1 million pounds and 45.0 million pounds of lead, respectively, for a total purchase price of $53,235 and $46,550, respectively.

Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts and options to hedge a portion of the Company’s foreign currency exposures for lead, as well as other foreign currency exposures so that gains and losses on these contracts offset changes in the underlying foreign currency denominated exposures. The vast majority of such contracts are for a period not extending beyond one year. As of October 1, 2017 and March 31, 2017, the Company had entered into a total of $45,116 and $30,751, respectively, of such contracts.

In the coming twelve months, the Company anticipates that $4,102 of pretax gain relating to lead and foreign currency forward contracts will be reclassified from accumulated other comprehensive income (“AOCI”) as part of cost of goods sold. This amount represents the current net unrealized impact of hedging lead and foreign exchange rates, which will change as market rates change in the future, and will ultimately be realized in the Consolidated Condensed Statement of Income as an offset to the corresponding actual changes in lead costs to be realized in connection with the variable lead cost and foreign exchange rates being hedged.

Derivatives not Designated in Hedging Relationships

Foreign Currency Forward Contracts

The Company also enters into foreign currency forward contracts to economically hedge foreign currency fluctuations on intercompany loans and foreign currency denominated receivables and payables. These are not designated as hedging instruments and changes in fair value of these instruments are recorded directly in the Consolidated Condensed Statements of Income. As of October 1, 2017 and March 31, 2017, the notional amount of these contracts was $14,740 and $13,560, respectively.

Presented below in tabular form is information on the location and amounts of derivative fair values in the Consolidated Condensed Balance Sheets and derivative gains and losses in the Consolidated Condensed Statements of Income:

Fair Value of Derivative Instruments

October 1, 2017 and March 31, 2017

	Derivatives and Hedging Activities Designated as Cash Flow Hedges				Derivatives and Hedging Activities Not Designated as Hedging Instruments
	October 1, 2017		March 31, 2017		October 1, 2017		March 31, 2017
Prepaid and other current assets
Lead forward contracts	$	3,356	$	1,163	$	—	$	—
Foreign currency forward contracts	—		11		—		—
Total assets	$	3,356	$	1,174	$	—	$	—
Accrued expenses
Foreign currency forward contracts	$	278	$	—	$	25	$	324
Total liabilities	$	278	$	—	$	25	$	324

The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income

For the quarter ended October 1, 2017

Derivatives Designated as Cash Flow Hedges	Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)			Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)	Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts	$	3,896		Cost of goods sold	$	(1,892	)
Foreign currency forward contracts	(1,029		)	Cost of goods sold	(1,067		)
Total	$	2,867			$	(2,959	)

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Pretax Gain (Loss)
Foreign currency forward contracts	Other (income) expense, net	$	(36	)
Total		$	(36	)

The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income

For the quarter ended October 2, 2016

Derivatives Designated as Cash Flow Hedges	Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)		Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)	Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts	$	2,807	Cost of goods sold	$	217
Foreign currency forward contracts	150		Cost of goods sold	(46		)
Total	$	2,957		$	171

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Pretax Gain (Loss)
Foreign currency forward contracts	Other (income) expense, net	$	125
Total		$	125

The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income

For the six months ended October 1, 2017

Derivatives Designated as Cash Flow Hedges	Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)			Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)	Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts	$	3,082		Cost of goods sold	$	(89	)
Foreign currency forward contracts	(3,088		)	Cost of goods sold	(903		)
Total	$	(6	)		$	(992	)

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Pretax Gain (Loss)
Foreign currency forward contracts	Other (income) expense, net	$	12
Total		$	12

The Effect of Derivative Instruments on the Consolidated Condensed Statements of Income

For the six months ended October 2, 2016

Derivatives Designated as Cash Flow Hedges	Pretax Gain (Loss) Recognized in AOCI on Derivative (Effective Portion)		Location of Gain (Loss)  Reclassified from AOCI into Income (Effective Portion)	Pretax Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Lead forward contracts	$	4,620	Cost of goods sold	$	1,276
Foreign currency forward contracts	278		Cost of goods sold	(226		)
Total	$	4,898		$	1,050

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Pretax Gain (Loss)
Foreign currency forward contracts	Other (income) expense, net	$	(177	)
Total		$	(177	)