Derivative Instruments and Hedging Activities Disclosure

9 Months Ended

Sep. 30, 2011

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure

4. Derivative financial instruments are utilized by the Company to reduce foreign currency exchange risks. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. The Company does not enter into financial instruments for trading or speculative purposes. The derivative financial instruments include cash flow hedges of foreign currency exposures. The change in values of the fair value foreign currency hedges offset exchange rate fluctuations on the foreign currency-denominated intercompany loans and obligations. The Company presently hedges exposures in the Euro, Canadian dollar, British pound sterling, Swiss franc, Swedish krona, Norwegian krone, Mexican peso and Chinese yuan generally for transactions expected to occur within the next 12 months. The notional amount of these foreign currency derivative instruments at December 31, 2010 and September 30, 2011 was $234,600 and $232,700, respectively. The counterparties to each of these agreements are major commercial banks.

The Company uses foreign currency forward contracts as hedges of the fair value of certain non-U.S. dollar denominated asset and liability positions, primarily accounts receivable and debt. Gains and losses resulting from the impact of currency exchange rate movements on these forward contracts are recognized in the accompanying Consolidated Statements of Operations in the period in which the exchange rates change and offset the foreign currency gains and losses on the underlying exposure being hedged.

Foreign currency forward contracts are also used to hedge variable cash flows associated with forecasted sales and purchases denominated in currencies that are not the functional currency of certain entities. The forward contracts have maturities of less than twelve months pursuant to the Company’s policies and hedging practices. These forward contracts meet the criteria for and have been designated as cash flow hedges. Accordingly, the effective portion of the change in fair value of such forward contracts (approximately $(3,263) and $4,719 as of December 31, 2010 and September 30, 2011, respectively) are recorded as a separate component of stockholders’ equity in the accompanying Consolidated Balance Sheets and reclassified into earnings as the hedged transactions occur.

The Company assesses hedge ineffectiveness quarterly using the hypothetical derivative methodology. In doing so, the Company monitors the actual and forecasted foreign currency sales and purchases versus the amounts hedged to identify any hedge ineffectiveness. Any hedge ineffectiveness is recorded as an adjustment in the accompanying consolidated financial statements of operations in the period in which the ineffectiveness occurs. The Company also performs regression analysis comparing the change in value of the hedging contracts versus the underlying foreign currency sales and purchases, which confirms a high correlation and hedge effectiveness.

The following table presents the location and amounts of derivative instrument fair values in the Condensed Consolidated Balance Sheets:

(assets)/liabilities	December 31, 2010				September 30, 2011
Derivatives designated as hedging instruments		Accrued liabilities	$	3,413		Accrued liabilities	$	(4,917	)
Derivatives not designated as hedging instruments		Accrued liabilities	$	564		Accrued liabilities	$	(438	)

The following table presents the location and amount of gains and losses on foreign currency derivative instruments in the Condensed Consolidated Statements of Operations:

Derivatives Designated as Cash Flow Hedges	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion)		Amount of Gain (Loss) Reclassified from Other Comprehensive Income into Income (Effective Portion)		Amount of Gain (Loss) Recognized in Income on Derivative  (Ineffective Portion)
Three months ended Sept 30, 2010	$	(6,739)	$	(880)	$	172
Three months ended Sept 30, 2011	$	8,397	$	(2,606)	$	446
Nine months ended Sept 30, 2010	$	824	$	685	$	(43)
Nine months ended Sept 30, 2011	$	3,492	$	(4,490)	$	356
Derivatives not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivatives		Amount of Gain (Loss) Recognized in Income on Derivatives
Three months ended Sept 30, 2010		Other income	$	(438)
Three months ended Sept 30, 2011		Other income	$	888
Nine months ended Sept 30, 2010		Other income	$	(594)
Nine months ended Sept 30, 2011		Other income	$	995

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within the different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded on the Condensed Consolidated Balance Sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.

Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

a. Quoted prices for similar assets or liabilities in active markets;

b. Quoted prices for identical or similar assets or liabilities in non-active markets;

c. Pricing models whose inputs are observable for substantially the full term of the asset or liability; and

d. Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.

Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

The valuation of foreign exchange forward contracts was determined using widely accepted valuation techniques. This analysis reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including forward points. The Company incorporated credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Although the Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as current credit ratings, to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2011 and December 31, 2010, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September 30, 2011, and December 31, 2010:

Derivative Contracts	Total Derivative (Assets) Liabilities			Quoted Prices in Active Markets for Identical Assets Level (1)	Significant Other Observable Inputs Level (2)			Significant Unobservable Inputs Level (3)
September 30, 2011	$	(5,355	)		$	(5,355	)
December 31, 2010	$	3,977			$	3,977

On September 30, 2011, the land, building and certain manufacturing equipment located at Albany, Georgia were sold for $8,139, which approximated the carrying value of those assets. These assets had been classified as “assets held for sale” in the Other current assets section of the Condensed Consolidated Balance Sheets.

The Company has notes, secured by government-controlled banks, from certain of its customers in the PRC to settle trade accounts receivable, which generally have maturities of six months or less. The fair value of the Company’s debt is based upon prices of similar instruments in the marketplace.

The carrying amounts and fair values of the Company’s financial instruments are as follows:

	December 31, 2010						September 30, 2011
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Cash and cash equivalents	$	413,359		$	413,359		$	90,565		$	90,565
Notes receivable		69,547			69,547			31,896			31,896
Notes payable		(146,947	)		(146,947	)		(139,311	)		(139,311	)
Current portion of long-term debt		(5,885	)		(5,885	)		(26,571	)		(26,571	)
Long-term debt		(320,724	)		(322,124	)		(329,556	)		(305,056	)
Derivative financial instruments		(3,977	)		(3,977	)		5,355			5,355