Derivative Financial Instruments

9 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company is exposed to market risks arising from adverse changes in commodity prices affecting the cost of raw materials and energy; interest rates and foreign exchange risks. In the normal course of business, these risks are managed through a variety of strategies, including the use of derivative instruments. Commodity forward contracts are periodically used to hedge forecasted purchases of certain commodities, foreign currency exchange contracts are used to hedge forecasted transactions denominated in a foreign currency, and the Company periodically uses interest rate swaps to hedge forecasted interest payments and the risk associated with variable interest rates on long-term debt.

The Company entered into forward contracts for copper and zinc during the 2015 transition period, and the years ended March 31, 2015 and March 31, 2014. The contracts essentially establish a fixed price for the underlying commodity and are designated and qualify as effective cash flow hedges of purchases of the commodity. Ineffectiveness is calculated as the amount by which the change in the fair value of the derivatives exceeds the change in the fair value of the anticipated commodity purchases.

The Company entered into interest rate swaps during fiscal 2014 requiring fixed rate payments on a total notional amount of $400,000 and receive one-month LIBOR. The fair value of interest rate swap agreements approximates the amount at which they could be settled, based on future LIBOR, and the established fixed rate is based primarily on quotes from banks. The Company performs assessments of the effectiveness of hedge instruments on a quarterly basis and during the 2015 transition period determined the hedges to be highly effective. The counterparties to the interest rate swap agreements expose the Company to credit risk in the event of nonperformance. However, at December 31, 2015, four of the outstanding swap agreements were in a net liability position which would require the Company to make the net settlement payments to the counterparties. The Company does not anticipate nonperformance by counterparties and does not hold or issue derivative financial instruments for trading purposes.

The Company entered into foreign currency forward contracts during fiscal 2015 to hedge forecasted cash receipts from a customer and forecasted inventory purchases and subsequent payments. The Company did not enter into any foreign currency forward contracts during fiscal 2014 or 2013. Contracts entered into prior to fiscal 2013 were used to hedge forecasted customer receivables and inventory purchases and subsequent payments, denominated in foreign currencies. These transactions were designated and qualified as effective cash flow hedges. Ineffectiveness with respect to forecasted inventory purchases or customer cash receipts was calculated based on changes in the forward rate until the anticipated purchase or cash receipt occurs; ineffectiveness of the hedge of the accounts payable was evaluated based on the change in fair value of its anticipated settlement.

The fair value of the commodity and foreign currency forward contracts is recorded within other assets or liabilities, as appropriate, and the effective portion is reflected in accumulated other comprehensive income (loss) in the financial statements. The gains or losses on the commodity forward contracts are recorded in inventory as the commodities are purchased and in cost of sales when the related inventory is sold. The gains or losses on the foreign currency forward contracts are recorded in earnings when the related inventory is sold or customer cash receipts are received.

Commodity forward contracts outstanding that hedge forecasted commodity purchases were as follows:

(Amounts in thousands of pounds)	December 31, 2015	March 31, 2015
Copper	7,750	16,475
Zinc	1,750	4,840

At December 31, 2015, the Company had three outstanding interest rate swap contracts with notional amounts of $100,000 each with maturity dates in August 2016, 2017 and 2018, as well as two interest rate swap contracts with notional amounts of $50,000 each with maturity dates in November 2016 and 2017 as follows (See Note 10 for additional information):

	Notional		Fair Value			Pay Fixed		Receive Floating		Maturity Date
Non-amortizing swap	$	100,000	$	(200	)	0.87	%	0.42	%	August 2016
Non-amortizing swap	100,000		(668		)	1.29	%	0.42	%	August 2017
Non-amortizing swap	100,000		(1,441		)	1.69	%	0.42	%	August 2018
Non-amortizing swap	50,000		9			0.65	%	0.42	%	November 2016
Non-amortizing swap	50,000		(139		)	1.10	%	0.42	%	November 2017

The amount to be paid or received under these swaps is recorded as an adjustment to interest expense.

As of December 31, 2015, the Company had the following outstanding Euro currency forward contracts in place:

(Amounts in thousands)	December 31, 2015	March 31, 2015
Euros Sold	67,780	98,580
Euros Purchased	12,589	33,354

Derivative instruments designated as hedging instruments in the consolidated balance sheets were as follows:

		Asset Derivatives Fair Value				Liability Derivatives Fair Value
	Location	December 31, 2015		March 31, 2015		December 31, 2015		March 31, 2015
Commodity forward contracts	Other current assets / Other current liabilities	$	—	$	1,054	$	4,445	$	899
Commodity forward contracts	Other noncurrent assets / Other noncurrent liabilities	—		271		—		2
Foreign currency forward contracts	Other current assets / Other current liabilities	2,875		2,664		1,442		5,101
Foreign currency forward contracts	Other noncurrent assets / Other noncurrent liabilities	1,095		3,834		18		897
Interest rate swap contracts	Other current assets / Other current liabilities	9		—		—		—
Interest rate swap contracts	Other noncurrent assets / Other noncurrent liabilities	—		—		2,448		4,238
Total		$	3,979	$	7,823	$	8,353	$	11,137

Due to the nature of the Company's business, the benefits associated with the commodity contracts may be passed on to the customer and not realized by the Company.

Derivative gains and losses in the consolidated statements of comprehensive income (loss) were as follows:

	Gain (Loss) Reclassified from AOCI				Gain (Loss) Recognized in Income (ineffective portion and amount excluded from effectiveness testing)
	Location	Amount			Location	Amount
Nine months ended December 31, 2015
Commodity forward contracts (1)	Cost of sales	$	(2,825	)	Cost of sales	$	—
Interest rate swap contracts	Interest expense	(3,028		)	Interest expense	—
Foreign currency forward contracts	Cost of sales	(1,768		)	Cost of sales	—
Year ended March 31, 2015
Commodity forward contracts	Cost of sales	(5,515		)	Cost of sales	—
Interest rate swap contracts	Interest expense	(4,020		)	Interest expense	—
Foreign currency forward contracts	Cost of sales	(9,182		)	Cost of sales	—

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(1) As restated.

All derivatives used by the Company during the periods presented were designated as hedging instruments.

The Company expects that any unrealized losses will be realized and reported in cost of sales when the cost of the commodities is included in cost of sales. Estimated and actual gains or losses will change as market prices change.