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FOREIGN CURRENCY DERIVATIVES
12 Months Ended
Mar. 31, 2014
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 March 31, 2014.  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 March 31, 2014, 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. However, the following tables provide information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties. 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 March 31, 2014 and March 31, 2013, no cash collateral had been received or pledged related to these derivative instruments.

Offsetting of Financial Assets/Liabilities under Master Netting Agreements with Derivative Counterparties

As of March 31, 2014:
 
Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheets
Gross Amounts Not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
 
(in thousands)
Gross Amount of Eligible Offsetting Recognized Derivative Liabilities
Cash Collateral Received
Net Amount of Derivative Assets
Derivatives subject to master netting agreements
$
473

$
(473
)
$

$

Derivatives not subject to master netting agreements
654

 
 
654

Total
$
1,127

 
 
$
654



 
Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheets
Gross Amounts Not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
 
(in thousands)
Gross Amount of Eligible Offsetting Recognized Derivative Assets
Cash Collateral Received
Net Amount of Derivative Liabilities
Derivatives subject to master netting agreements
$
(1,428
)
$
473

$

$
(955
)
Derivatives not subject to master netting agreements
(1,455
)
 
 
(1,455
)
Total
$
(2,883
)
 
 
$
(2,410
)

As of March 31, 2013:
 
Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheets
Gross Amounts Not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
 
(in thousands)
Gross Amount of Eligible Offsetting Recognized Derivative Liabilities
Cash Collateral Received
Net Amount of Derivative Assets
Derivatives subject to master netting agreements
$
1,005

$
(215
)
$

$
790

Derivatives not subject to master netting agreements
660

 
 
660

Total
$
1,665

 
 
$
1,450



 
Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheets
Gross Amounts Not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
 
(in thousands)
Gross Amount of Eligible Offsetting Recognized Derivative Assets
Cash Collateral Received
Net Amount of Derivative Liabilities
Derivatives subject to master netting agreements
$
(215
)
$
215

$

$

Derivatives not subject to master netting agreements
(79
)
 
 
(79
)
Total
$
(294
)
 
 
$
(79
)


The Company's derivative instruments are measured using Level 2 fair value inputs.

Non-Designated Hedges
 
As of March 31, 2014, the Company had foreign currency forward contracts denominated in EUR, 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, accounts receivable, and accounts payable balances. The following table summarizes the notional value of the Company’s outstanding foreign exchange currency contracts and approximate U.S. Dollar equivalent (“USD Equivalent”) at March 31, 2014:

 
Local Currency
 
USD Equivalent
 
Position
 
Maturity
 
(in thousands)
 
(in thousands)
 
 
 
 
EUR
19,600

 
$
26,951

 
Sell EUR
 
1 month
GBP
£
1,600

 
$
2,662

 
Sell GBP
 
1 month
AUD
A$
3,700

 
$
3,413

 
Sell AUD
 
1 month


Effect of Non-Designated Derivative Contracts on the Consolidated Statements of Operations

The effect of non-designated derivative contracts on results of operations recognized in interest and other income (expense), net in the consolidated statements of operations was as follows:

 
 
Fiscal Year Ended March 31,
(in thousands)
 
2014
 
2013
 
2012
Gain on foreign exchange contracts
 
$
1,631

 
$
1,065

 
$
1,009



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 March 31, 2014, the Company had foreign currency put and call option contracts of approximately €55.7 million and £23.9 million.  As of March 31, 2013, the Company had foreign currency put and call option contracts of approximately €50.2 million and £19.9 million. The Company will reclassify all amounts accumulated in other comprehensive income into earnings within the next twelve months.

The Company hedges a portion of the forecasted Mexican Peso (“MXN”) denominated expenditures with a cross-currency swap. There were no material gains in AOCI as of March 31, 2014 to be recognized during the next 12 months due to the recognition of the hedged forecasted expenditures. As of March 31, 2014 and 2013, the Company had foreign currency swap contracts of approximately MXN204.6 million and MXN325.4 million, respectively.

The following table summarizes the notional value of the Company's outstanding MXN currency swaps and approximate USD Equivalent at March 31, 2014:

 
 
Local Currency
 
USD Equivalent
 
Position
 
Maturity
 
 
(in thousands)
 
(in thousands)
 
 
 
 
 
MX$
 
204,550

 
$
15,339

 
Buy MXN
 
Monthly over
9 months


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

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges on AOCI and the consolidated statements of operations for fiscal years ended March 31, 2014, 2013, and 2012:

(in thousands)
 
2014
 
2013
 
2012
Gain (loss) included in AOCI as of beginning of period
 
$
1,371

 
$
1,937

 
$
(3,814
)
 
 
 
 
 
 
 
Amount of gain (loss) recognized in OCI (effective portion)
 
(3,750
)
 
3,441

 
2,951

 
 
 
 
 
 
 
Amount of gain (loss) reclassified from OCI into net revenues (effective portion)
 
(965
)
 
3,367

 
(2,415
)
Amount of gain (loss) reclassified from OCI into cost of revenues (effective portion)
 
28

 
640

 
(385
)
Total amount of gain (loss) reclassified from AOCI to income (loss) (effective portion)
 
(937
)
 
4,007

 
(2,800
)
 
 
 
 
 
 
 
Loss included in AOCI as of end of period
 
$
(1,442
)
 
$
1,371

 
$
1,937



The Company recognized an immaterial loss in the consolidated statement operations on the ineffective portion of the cash flow hedges reported in interest and other income, net during the year ended March 31, 2014. There was no ineffective portion of hedges designated as cash flow hedging instruments during the years ended March 31, 2013 or March 31, 2012.