13.

Derivative Financial Instruments:

We are exposed to foreign currency exchange rate fluctuations in the normal course of business. We use derivative instruments (forward contracts) to hedge certain foreign currency exposures as part of our risk management strategy. The objective is to offset gains and losses resulting from these exposures with gains and losses on the forward contracts used to hedge them, thereby reducing volatility of earnings or protecting fair values of assets and liabilities. We do

not

enter into any trading or speculative positions with regard to derivative instruments.

We primarily use forward contracts, with maturities less than

four

months, to protect against the foreign currency exchange rate risks inherent in our forecasted transactions related to purchase commitments and sales, denominated in various currencies. These derivative instruments are designated and qualify as cash flow hedges.

The effectiveness of the cash flow hedges is determined by comparing the cumulative change in the fair value of the hedge contract with the cumulative change in the fair value of the hedged transaction, both of which are based on forward rates. The effective portion of the gain or loss on these cash flow hedges is initially recorded in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. Once the hedged transaction is recognized, the gain or loss is recognized in our statement of operations. At

March 31, 2018

and

December 31, 2018,

respectively, the following forward contracts were entered into to hedge against the volatility of foreign currency exchange rates for certain forecasted sales and purchases:

	March 31, 2018
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	212	Accrued expenses	$	377

	December 31, 2018
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	373	Accrued expenses	$	342

For these derivatives designated as cash flow hedging instruments, during the

three

and

nine

month periods ended

December 31, 2018,

a net pre-tax loss of

$394

and

$513,

respectively, were recognized in other comprehensive income (loss). In addition, during the

three

and

nine

month periods ended

December 31, 2018, a

net pre-tax gain of

$943

and a net pre-tax loss of

$557,

respectively, were reclassified from accumulated other comprehensive income (loss) into cost of sales (for hedging purchases), and a net pre-tax loss of

$1,070

and a net pre-tax gain of

$268,

respectively, were reclassified from accumulated other comprehensive income (loss) into sales (for hedging sales) in the accompanying statement of operations.

Derivatives

not

designated as cash flow hedging instruments consist primarily of forwards used to hedge foreign currency balance sheet exposures. These hedging instruments are used to offset foreign currency changes in the fair values of the underlying assets and liabilities. The gains and losses on these foreign currency forward contracts are recognized in other income (loss) in the same period as the re-measurement gains and losses of the related foreign currency denominated assets and liabilities and thus naturally offset these gains and losses. At

March 31, 2018

and

December 31, 2018,

we had the following forward contracts that were entered into to hedge against these exposures.

	March 31, 2018
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	45	Accrued expenses	$	137

	December 31, 2018
	Fair Value of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
	Caption	Value		Caption	Value

Foreign exchange contracts	Prepaid and other	$	324	Accrued expenses	$	337

For these derivatives

not

designated as cash flow hedging instruments during the

three

month and

nine

month periods ended

December 31, 2018,

losses of

$300

on hedging contracts were recognized in other income (loss), along with approximately

$276

in exchange gains that were recognized in other income (loss) in the accompanying statement of operations.

March 31, 2018

and

December 31, 2018,

we had outstanding foreign exchange contracts with notional amounts totaling

$156,238

and

$196,547,

respectively, denominated primarily in Euros, Czech Korunas, and Japanese Yen.