Foreign Currency Exchange Rate Risk

9 Months Ended

Sep. 30, 2012

Foreign Currency [Abstract]

Foreign Currency Exchange Rate Risk

Foreign Currency Exchange Rate Risk

The gains and losses related to outstanding derivative instruments recorded in other expense (income) are offset by the reciprocal gains and losses from the underlying assets or liabilities which originally gave rise to the exposure. The net amount of these gains and losses for the three and nine months ended September 30, 2012 were gains of $2.6 million and $2.9 million, respectively. The net amount of these gains and losses for the three and nine months ended September 30, 2011 were a loss of $3.2 million and a loss of $7.9 million, respectively.

Note 5. Foreign Currency Exchange Rate Risk - (Continued)

The net notional amounts are used to measure the volume of foreign currency forward contracts and do not represent exposure to foreign currency gains or losses. The table below presents the net notional amounts of the Company’s outstanding foreign currency forward contracts by currency (in thousands):

	September 30, 2012		December 31, 2011
Euro	$	3,645	$	19,640
Swedish kronor	3,647		18,091
British pound sterling	6,686		3,050
Australian dollar	2,361		609
Danish kroner	520		174
Japanese yen	4,515		3,581
	$	21,374	$	45,145

At September 30, 2012, all of the Company’s foreign currency forward contracts had maturities of 45 days or less.

On June 29, 2012, the Company entered into two zero-cost collar options to limit the Company's exposure to changes in the US dollar/Euro and the US dollar/Swedish kronor exchange rates. The zero-cost collar option hedges are designed to protect the Company as the US dollar strengthens, but also provide the Company with some flexibility if the US dollar weakens. The foreign exchange hedging structure is set up, generally, on a six month time horizon. These options are not designated as hedging instruments and accordingly, gains and losses related to these options will be recorded as a component of net income. For the three months ended September 30, 2012, the Company recorded a loss of $1.7 million related to these options.

The fair value carrying amount of our derivative instruments included in the Consolidated Balance Sheets are as follows (in thousands):

	September 30, 2012				December 31, 2011
	Other Current Assets		Other Current Liabilities		Other Current Assets		Other Current Liabilities
Foreign exchange contracts	$	1,147	$	383	$	245	$	640
Zero-cost collar options	—		1,671		—		—