Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

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Fair Value Measurements
 3 Months Ended
Jun. 30, 2013
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
Fair Value. We measure fair value based on authoritative accounting guidance, which defines fair value, establishes a framework for measuring fair value and expands on required disclosures regarding fair value measurements.
Inputs are referred to as assumptions that market participants would use in pricing the asset or liability. The uses of inputs in the valuation process are categorized into a three-level fair value hierarchy.
•
Level 1 — uses quoted prices in active markets for identical assets or liabilities we have the ability to access.
•
Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•
Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. 
Financial assets and liabilities with carrying amounts approximating fair value include cash, trade accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying amount of these financial assets and liabilities approximates fair value because of their short maturities.  At June 30, 2013 and March 31, 2013, no assets or liabilities were valued using Level 3 criteria. 
Information about our long-term debt that is not measured at fair value is as follows:
 
June 30, 2013
 
March 31, 2013
 
 
 
Carrying
Value
 
Fair Value
 
Carrying
Value
 
Fair Value
 
Valuation Technique
Financial Liabilities
 

 
 

 
 

 
 

 
 
Long-term debt
$
131,625

 
$
131,625

 
$
118,145

 
$
131,436

 
Level 2 - Market Approach
 
Our term loan is privately held and does not trade on over-the-counter markets.  As the quoted price is only available for similar financial assets, the Company concluded the market is not active enough to be classified as a Level 1 valuation.  However, the pricing is indirectly observable through dealers and has been classified as Level 2.  Differences between carrying value and fair value are primarily due to instruments that provide fixed interest rates or contain fixed interest rate elements. Inherently, such instruments are subject to fluctuations in fair value due to movements in interest rates.

Foreign Currency Forward Contracts
We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to offset the risk associated with the effects of certain foreign currency exposures. Under this program, increases or decreases in our foreign currency exposures are offset by gains or losses on the forward contracts to mitigate foreign currency transaction gains or losses. These foreign currency exposures typically arise from intercompany transactions. Our forward contracts generally have terms of 30 days. We do not use forward contracts for trading purposes or designate these forward contracts as hedging instruments pursuant to ASC 815. We adjust the carrying amount of all contracts to their fair value at the end of each reporting period and unrealized gains and losses are included in our results of operations for that period. These gains and losses largely offset gains and losses resulting from settlement of payments received from our foreign operations which are settled in U.S. dollars. All outstanding foreign currency forward contracts are marked to market at the end of the period with unrealized gains and losses included in miscellaneous expense. The fair value is determined by quoted prices from active foreign currency markets (Level 2 fair value).  The condensed consolidated balance sheet reflects unrealized gains within accounts receivable, net and unrealized losses within accrued liabilities. Our ultimate realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and other factors in effect as the contracts mature. As of June 30, 2013 and March 31, 2013, the notional amounts of forward contracts we held to sell U.S. Dollars in exchange for other major international currencies were as follows:
Notional amount of foreign exchange forward contracts by currency
 
June 30, 2013
 
March 31, 2013
Russian Ruble
$
2,670

 
$
4,233

Euro
4,823

 
2,510

Canadian Dollar
1,793

 
2,134

South Korean Won
933

 
919

Other
523

 
329

Total notional amounts
$
10,742

 
$
10,125


 
 
June 30, 2013
 
March 31, 2013
 
 
Fair Value
 
Fair Value
 
 
Assets
Liabilities
 
Assets
Liabilities
Foreign exchange contract forwards
 
$
162

$
—

 
$
87

$
32


Foreign currency gains or losses related to our forward contracts in the accompanying condensed consolidated statements of operations were gains of $165 and $662 for the three months ended June 30, 2013 and 2012, respectively. Gains and losses from our forward contracts were offset by transaction gains or losses incurred with the settlement of transactions denominated in foreign currencies. Our net foreign currency gains were $17 and $52 for the three months ended June 30, 2013 and 2012, respectively.
Interest Rate Swap
During the three months ended June 30, 2013, the Company entered into an interest rate swap contract to reduce the exposure to interest rate fluctuations associated with its variable rate term loan. Under the agreement we will pay a fixed amount and receive payments based on a variable rate. Although we believe the interest rate swap is considered to be highly effective, as the terms of the interest rate swap are identical to our commitments and obligations under our variable rate term loan, the contract is not designated as a cash flow hedge pursuant to ASC 815. At each reporting period our interest rate swap is adjusted to fair value based on dealer quotes, which consider forward curves and volatility levels (Level 2 Fair Value). Changes in the fair value of our cash flow hedges are recorded in earnings within interest expense. Unrealized gains and losses are reported within accounts receivable and accrued liabilities, respectively. As of June 30, 2013 the fair value of the interest rate swap contract represented a gain of $211.


Transfers out of accumulated other comprehensive income
During the three months ended June 30, 2013 and 2012, there were no transfers out of accumulated other comprehensive income (loss) which impacted our net income for the respective periods.