FINANCIAL INSTRUMENTS AND DERIVATIVES

Derivative Instruments and Hedging Activities

The Company’s activities expose it to a variety of market risks, which primarily include the risks related to the effects of changes in foreign currency exchange rates, interest rates and commodity prices. These financial exposures are monitored and managed by the Company as part of its overall risk management program. The objective of this risk management program is to reduce the volatility that these market risks may have on the Company’s operating results and equity. The Company employs derivative financial instruments to hedge certain anticipated transactions, firm commitments, or assets and liabilities denominated in foreign currencies. Additionally, the Company utilizes interest rate swaps to convert variable rate debt to fixed rate debt and to convert fixed rate debt to variable rate debt, cross currency basis swaps to convert debt denominated in one currency to another currency and commodity swaps to fix certain variable raw material costs.

Derivative Instruments Not Designated as Hedging

The Company enters into derivative financial instruments to hedge the foreign exchange revaluation risk associated with recorded assets and liabilities that are denominated in a non-functional currency. The gains and losses on these derivative transactions offset the gains and losses generated by the revaluation of the underlying non-functional currency balances and are recorded in “Other expense (income), net” on the Consolidated Statements of Operations. The Company primarily uses forward foreign exchange contracts and cross currency basis swaps to hedge these risks. The Company’s significant contracts outstanding as of September 30, 2013 are summarized in the tables that follow.

On June 19, 2013, the Company terminated 347.8 million euros of cross currency basis swaps that had been used to offset the revaluation of a euro denominated intercompany note receivable at a U.S. dollar functional entity.

On June 27, 2013 and September 16, 2013, the Company dedesignated 36.0 million euros and 48.0 million euros, respectively, of its net investment hedges. The change in the value of the dedesignated hedges will be recorded in “Other expense (income), net” on the Consolidated Statement of Operations and going forward it will offset the change in the value of a euro denominated intercompany note receivable held at a U.S. dollar functional entity.

Cash Flow Hedges

Foreign Exchange Risk Management

The Company uses a layered hedging program to hedge select anticipated foreign currency cash flows to reduce volatility in both cash flows and reported earnings of the consolidated Company. The Company accounts for the foreign exchange forward contracts as cash flow hedges. As a result, the Company records the fair value of the contracts primarily through AOCI based on the tested effectiveness of the foreign exchange forward contracts. The Company measures the effectiveness of cash flow hedges of anticipated transactions on a spot-to-spot basis rather than on a forward-to-forward basis. Accordingly, the spot-to-spot change in the derivative fair value will be deferred in AOCI and released and recorded on the Consolidated Statements of Operations in the same period that the hedged transaction is recorded. The time value component of the fair value of the derivative is deemed ineffective and is reported currently in “Other expense (income), net” on the Consolidated Statements of Operations in the period which it is applicable. Any cash flows associated with these instruments are included in cash from operating activities in the Consolidated Statements of Cash Flows in accordance with the Company’s policy of classifying the cash flows from these instruments in the same category as the cash flows from the items being hedged.

These foreign exchange forward contracts generally have maturities up to eighteen months and the counterparties to the transactions are typically large international financial institutions. The Company’s significant contracts outstanding as of September 30, 2013 are summarized in the tables that follow.

Interest Rate Risk Management

The Company uses interest rate swaps to convert a portion of its variable interest rate debt to fixed interest rate debt. As of September 30, 2013, the Company has two groups of significant interest rate swaps. One of the groups of swaps has notional amounts totaling 12.6 billion Japanese yen, and effectively converts the underlying variable interest rates to an average fixed interest rate of 0.2% for a term of three years, ending in September 2014. Another swap has a notional amount of 65.0 million Swiss francs, and effectively converts the underlying variable interest rates to a fixed interest rate of 0.7% for a term of five years, ending in September 2016.

The Company enters into interest rate swap contracts infrequently as they are only used to manage interest rate risk on long-term debt instruments and not for speculative purposes. Any cash flows associated with these instruments are included in cash from financing activities in the Consolidated Statements of Cash Flows in accordance with the Company’s policy of classifying the cash flows from these instruments in the same category as the cash flows from the items being hedged. The Company’s significant contracts outstanding as of September 30, 2013 are summarized in the tables that follow.

Commodity Risk Management

The Company selectively enters into commodity swaps to effectively fix certain variable raw material costs. These swaps are used purely to stabilize the cost of components used in the production of certain of the Company’s products. The Company generally accounts for the commodity swaps as cash flow hedges. As a result, the Company records the fair value of the contracts primarily through AOCI based on the tested effectiveness of the commodity swaps. The Company measures the effectiveness of cash flow hedges of anticipated transactions on a spot-to-spot basis rather than on a forward-to-forward basis. Accordingly, the spot-to-spot change in the derivative fair value will be deferred in AOCI and released and recorded on the Consolidated Statements of Operations in the same period that the hedged transaction is recorded. The time value component of the fair value of the derivative is deemed ineffective and is reported currently in “Interest expense” on the Consolidated Statements of Operations in the period which it is applicable. Any cash flows associated with these instruments are included in cash from operating activities in the Consolidated Statements of Cash Flows in accordance with the Company’s policy of classifying the cash flows from these instruments in the same category as the cash flows from the items being hedged.

The following tables summarize the notional amounts and fair value of the Company’s cash flow hedges and non-designated derivatives at September 30, 2013:



Foreign Exchange Forward Contracts	Notional Amounts Maturing in the Year									Fair Value Net Asset (Liability)
(in thousands)	2013			2014			2015			September 30, 2013

Forward sale, 17.7 million Australian dollars	$	10,854		$	5,356		$	778		$	477
Forward purchase, 11.4 million British pounds	(18,485		)	—			—			315
Forward sale, 46.3 million Canadian dollars	14,891			26,127			3,923			327
Forward purchase, 23.2 million Danish kroner	(4,204		)	—			—			(4		)
Forward sale, 159.2 million euros	40,879			149,922			23,137			(2,513		)
Forward sale, 376.6 million Japanese yen	10,238			(6,417		)	—			(1,070		)
Forward sale, 177.5 million Mexican pesos	13,513			—			—			194
Forward purchase, 10.3 million Norwegian kroner	(1,718		)	—			—			(55		)
Forward sale, 17.6 million Polish zlotys	5,635			—			—			(39		)
Forward sale, 3.0 million Singapore dollars	2,385			—			—			21
Forward sale, 7.7 billion South Korean won	7,144			—			—			66
Forward purchase, 1.4 billion Swedish kronor	(115,715		)	(89,865		)	(13,691		)	(554		)
Forward purchase, 57.3 million Swiss francs	(91,982		)	24,108			3,444			(137		)
Forward sale, 10.0 million Taiwanese dollars	337			—			—			5
Total foreign exchange forward contracts	$	(126,228	)	$	109,231		$	17,591		$	(2,967	)



Interest Rate Swaps	Notional Amounts Maturing in the Year										Fair Value Net Asset (Liability)
(in thousands)	2013		2014		2015		2016		2017 and Beyond		September 30, 2013

Euro	$	319	$	977	$	977	$	977	$	1,221	$	(373	)
Japanese yen	—		127,793		—		—		—		217
Swiss francs	—		—		—		71,903		—		(865		)
Total interest rate swaps	$	319	$	128,770	$	977	$	72,880	$	1,221	$	(1,021	)



Commodity Swap Contracts	Notional Amounts Maturing in the Year				Fair Value Net Asset (Liability)
(in thousands)	2013		2014		September 30, 2013

Silver swap - U.S. dollar	$	615	$	1,279	$	(396	)
Platinum swap - U.S. dollar	514		1,074		(97		)
Total commodity swap contracts	$	1,129	$	2,353	$	(493	)



Cross Currency Basis Swap	Notional Amounts Maturing in the Year						Fair Value Net Asset (Liability)
(in thousands)	2013		2014		2015 and Beyond		September 30, 2013

449.8 million euro at $1.45 pay U.S. dollar three-month LIBOR receive three-month EURIBOR	$	—	$	608,697	$	—	$	(43,752	)
84.0 million euro at $1.34 pay three-month EURIBOR receive U.S. dollar three-month LIBOR	113,627		—		—		(1,129		)
166.4 million Swiss franc at 0.93 pay Swiss franc three-month LIBOR receive U.S. dollar three-month LIBOR	27,655		110,619		45,780		(5,359		)
Total cross currency basis swap	$	141,282	$	719,316	$	45,780	$	(50,240	)

At September 30, 2013, deferred net losses on derivative instruments of $5.7 million, which were recorded in AOCI, are expected to be reclassified to current earnings during the next twelve months. This reclassification is primarily due to the sale of inventory that includes hedged purchases and recognized interest expense on interest rate swaps. The maximum term over which the Company is hedging exposures to variability of cash flows (for all forecasted transactions, excluding interest payments on variable interest rate debt) is eighteen months. Overall, the derivatives designated as cash flow hedges are highly effective. Any cash flows associated with these instruments are included in cash from operating activities in the Consolidated Statements of Cash Flows in accordance with the Company’s policy of classifying the cash flows from these instruments in the same category as the cash flows from the items being hedged.

Hedges of Net Investments in Foreign Operations

The Company has significant investments in foreign subsidiaries. The net assets of these subsidiaries are exposed to volatility in currency exchange rates. Currently, the Company uses both non-derivative financial instruments, including foreign currency denominated debt held at the parent company level and derivative financial instruments to hedge some of this exposure. Translation gains and losses related to the net assets of the foreign subsidiaries are offset by gains and losses in the non-derivative and derivative financial instruments designated as hedges of net investments, which are included in AOCI.

At September 30, 2013 and December 31, 2012, the Company had Swiss franc-denominated and Japanese yen-denominated debt and cross currency basis swaps denominated in euro and Swiss franc to hedge the currency exposure related to a designated portion of the net assets of its European, Swiss and Japanese subsidiaries. The fair value net asset (liability) of the cross currency interest rate swap agreements is the estimated amount the Company would receive (pay) at the reporting date, taking into account the effective interest rates, currency swap basis rates and foreign exchange rates. At September 30, 2013 and December 31, 2012, the estimated net fair values of the cross currency interest rate swap agreements was a liability of $60.5 million and a liability of $90.7 million, respectively, which are recorded in AOCI, net of tax effects. At September 30, 2013 and December 31, 2012, the accumulated translation gain (loss) on investments in foreign subsidiaries, primarily denominated in euros, Swiss francs, Japanese yen and Swedish kronor, net of these net investment hedges, were losses of $35.1 million and $71.4 million, respectively, which were included in AOCI, net of tax effects.

The following tables summarize the notional amounts and fair value of the Company’s cross currency basis swaps that are designated as hedges of net investments in foreign operations at September 30, 2013:



Cross Currency Basis Swaps	Notional Amounts Maturing in the Year										Fair Value Net Asset (Liability)
(in thousands)	2013		2014		2015		2016		2017 and Beyond		September 30, 2013

432.5 million Swiss franc at 0.93 pay Swiss franc three-month LIBOR receive U.S. dollar three-month LIBOR	$	—	$	88,938	$	62,611	$	110,619	$	216,261	$	(12,891	)
534.0 million euro at $1.26 pay three-month EURIBOR receive U.S. dollar three-month LIBOR	722,342		—		—		—		—		(47,597		)
Total cross currency basis swaps	$	722,342	$	88,938	$	62,611	$	110,619	$	216,261	$	(60,488	)

Fair Value Hedges

The Company uses interest rate swaps to convert a portion of its fixed interest rate debt to variable interest rate debt. The Company has a group of U.S. dollar denominated interest rate swaps with an initial total notional value of $150.0 million to effectively convert the underlying fixed interest rate of 4.1% on the Company’s $250.0 million Private Placement Notes (“PPN”) to variable rate for a term of five years, ending February 2016. The notional value of the swaps will decline proportionately as portions of the PPN mature. These interest rate swaps are designated as fair value hedges of the interest rate risk associated with the hedged portion of the fixed rate PPN. Accordingly, the Company will carry the portion of the hedged debt at fair value, with the change in debt and swaps offsetting each other in the Consolidated Statement of Operations. At September 30, 2013, the estimated net fair value of these interest rate swaps was an asset of $2.8 million.

The following tables summarize the notional amounts and fair value of the Company’s fair value hedges at September 30, 2013:



Interest Rate Swap	Notional Amounts Maturing in the Year						Fair Value Net Asset (Liability)
(in thousands)	2014		2015		2016		September 30, 2013

U.S. dollar	$	45,000	$	60,000	$	45,000	$	2,825
Total interest rate swap	$	45,000	$	60,000	$	45,000	$	2,825

The following tables summarize the fair value and consolidated balance sheet location of the Company’s derivatives at September 30, 2013 and December 31, 2012:



	September 30, 2013
(in thousands)	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets, Net		Accrued Liabilities		Other Noncurrent Liabilities
Designated as Hedges	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets, Net		Accrued Liabilities		Other Noncurrent Liabilities

Foreign exchange forward contracts	$	479	$	132	$	3,502	$	803
Commodity contracts	—		—		472		21
Interest rate swaps	2,491		551		463		402
Cross currency basis swaps	489		—		47,604		13,373
Total	$	3,459	$	683	$	52,041	$	14,599
Not Designated as Hedges

Foreign exchange forward contracts	$	2,790	$	—	$	2,063	$	—
DIO equity option contracts	—		—		—		137
Interest rate swaps	—		—		88		285
Cross currency basis swaps	1,797		—		4,743		47,294
Total	$	4,587	$	—	$	6,894	$	47,716



	December 31, 2012
(in thousands)	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets, Net		Accrued Liabilities		Other Noncurrent Liabilities
Designated as Hedges	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets, Net		Accrued Liabilities		Other Noncurrent Liabilities

Foreign exchange forward contracts	$	2,353	$	65	$	2,243	$	844
Commodity contracts	—		—		95		—
Interest rate swaps	2,192		2,535		525		948
Cross currency basis swaps	8,191		—		97,281		1,588
Total	$	12,736	$	2,600	$	100,144	$	3,380
Not Designated as Hedges

Foreign exchange forward contracts	$	6,652	$	—	$	1,353	$	—
DIO equity option contracts	—		—		—		153
Interest rate swaps	—		—		114		416
Cross currency basis swaps	537		—		40,026		55,858
Total	$	7,189	$	—	$	41,493	$	56,427

Balance Sheet Offsetting

Substantially all of the Company’s derivative contracts are subject to netting arrangements, whereby the right to offset occurs in the event of default or termination in accordance with the terms of the arrangements with the counterparty. While these contracts contain the enforceable right to offset through netting arrangements, the Company elects to present them on a gross basis in the Consolidated Balance Sheets.

Offsetting of financial assets and liabilities under netting arrangements at September 30, 2013:



							Gross Amounts Not Offset in the Consolidated Balance Sheets
(in thousands)	Gross Amounts Recognized		Gross Amount Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received/Pledged		Net Amount

Assets
Derivative contracts
Counterparty A	$	—	$	—	$	—	$	—		$	—	$	—
Counterparty B	1,073		—		1,073		(1,073		)	—		—
Counterparty C	3,483		—		3,483		(3,483		)	—		—
Counterparty D	1,083		—		1,083		(1,083		)	—		—
Counterparty E	—		—		—		—			—		—
Counterparty F	155		—		155		(155		)	—		—
Counterparty G	1,070		—		1,070		(1,070		)	—		—
Counterparty H	—		—		—		—			—		—
All Other	1,865		—		1,865		(472		)	—		1,393
Total Assets	$	8,729	$	—	$	8,729	$	(7,336	)	$	—	$	1,393



							Gross Amounts Not Offset in the Consolidated Balance Sheets
(in thousands)	Gross Amounts Recognized		Gross Amount Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received/Pledged		Net Amount

Liabilities
Derivative contracts
Counterparty A	$	18,119	$	—	$	18,119	$	—		$	—	$	18,119
Counterparty B	5,858		—		5,858		(1,073		)	—		4,785
Counterparty C	15,077		—		15,077		(3,483		)	—		11,594
Counterparty D	12,642		—		12,642		(1,083		)	—		11,559
Counterparty E	14,052		—		14,052		—			—		14,052
Counterparty F	35,989		—		35,989		(155		)	—		35,834
Counterparty G	2,792		—		2,792		(1,070		)	—		1,722
Counterparty H	9,044		—		9,044		—			—		9,044
All Other	7,677		—		7,677		(472		)	—		7,205
Total Liabilities	$	121,250	$	—	$	121,250	$	(7,336	)	$	—	$	113,914

Offsetting of financial assets and liabilities under netting arrangements at December 31, 2012:



							Gross Amounts Not Offset in the Consolidated Balance Sheets
(in thousands)	Gross Amounts Recognized		Gross Amount Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received/Pledged		Net Amount

Assets
Derivative contracts
Counterparty A	$	—	$	—	$	—	$	—		$	—	$	—
Counterparty B	2,110		—		2,110		(1,142		)	—		968
Counterparty C	9,682		—		9,682		(9,682		)	—		—
Counterparty D	1,618		—		1,618		(1,618		)	—		—
Counterparty E	1,579		—		1,579		(1,579		)	—		—
Counterparty F	183		—		183		(183		)	—		—
Counterparty G	2,843		—		2,843		(1,057		)	—		1,786
Counterparty H	—		—		—		—			—		—
All Other	4,510		—		4,510		(1,837		)	—		2,673
Total Assets	$	22,525	$	—	$	22,525	$	(17,098	)	$	—	$	5,427



							Gross Amounts Not Offset in the Consolidated Balance Sheets
(in thousands)	Gross Amounts Recognized		Gross Amount Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received/Pledged		Net Amount

Liabilities
Derivative contracts
Counterparty A	$	40,176	$	—	$	40,176	$	—		$	—	$	40,176
Counterparty B	1,142		—		1,142		(1,142		)	—		—
Counterparty C	38,019		—		38,019		(9,682		)	—		28,337
Counterparty D	10,432		—		10,432		(1,618		)	—		8,814
Counterparty E	17,802		—		17,802		(1,579		)	—		16,223
Counterparty F	84,260		—		84,260		(183		)	—		84,077
Counterparty G	1,057		—		1,057		(1,057		)	—		—
Counterparty H	7,378		—		7,378		—			—		7,378
All Other	1,178		—		1,178		(1,837		)	—		(659		)
Total Liabilities	$	201,444	$	—	$	201,444	$	(17,098	)	$	—	$	184,346

The following tables summarize the statements of operations impact of the Company’s cash flow hedges for the three and nine months ended September 30, 2013 and 2012:



Three Months Ended September 30, 2013
Derivatives in Cash Flow Hedging
(in thousands)	Gain (Loss) in AOCI			Classification of Gains (Losses)	Effective Portion Reclassified from AOCI into Income

Interest rate swaps	$	(414	)	Interest expense	$	(924	)
Foreign exchange forward contracts	(2,488		)	Cost of products sold	460
Foreign exchange forward contracts	(273		)	SG&A expenses	(27		)
Commodity contracts	457			Cost of products sold	(190		)
Total	$	(2,718	)		$	(681	)



Derivatives in Cash Flow Hedging
(in thousands)	Classification of Gains (Losses)	Ineffective Portion Recognized in Income

Foreign exchange forward contracts	Other expense (income), net	$	134
Commodity contracts	Interest expense	(13		)
Total		$	121



Three Months Ended September 30, 2012
Derivatives in Cash Flow Hedging
(in thousands)	Gain (Loss) in AOCI			Classification of Gains (Losses)	Effective Portion Reclassified from AOCI into Income

Interest rate swaps	$	(448	)	Interest expense	$	(899	)
Foreign exchange forward contracts	1,603			Cost of products sold	1,976
Foreign exchange forward contracts	(47		)	SG&A expenses	264
Commodity contracts	572			Cost of products sold	40
Total	$	1,680			$	1,381



Derivatives in Cash Flow Hedging
(in thousands)	Classification of Gains (Losses)	Ineffective Portion Recognized in Income

Foreign exchange forward contracts	Other expense (income), net	$	114
Commodity contracts	Interest expense	(14		)
Total		$	100



Nine Months Ended September 30, 2013
Derivatives in Cash Flow Hedging
(in thousands)	Gain (Loss) in AOCI			Classification of Gains (Losses)	Effective Portion Reclassified from AOCI into Income

Interest rate swaps	$	180		Interest expense	$	(2,755	)
Foreign exchange forward contracts	(3,790		)	Cost of products sold	1,589
Foreign exchange forward contracts	(184		)	SG&A expenses	(67		)
Commodity contracts	(802		)	Cost of products sold	12
Total	$	(4,596	)		$	(1,221	)



Derivatives in Cash Flow Hedging
(in thousands)	Classification of Gains (Losses)	Ineffective Portion Recognized in Income

Foreign exchange forward contracts	Other expense (income), net	$	323
Commodity contracts	Interest expense	(54		)
Total		$	269



Nine Months Ended September 30, 2012
Derivatives in Cash Flow Hedging
(in thousands)	Gain (Loss) in AOCI			Classification of Gains (Losses)	Effective Portion Reclassified from AOCI into Income

Interest rate swaps	$	(1,848	)	Interest expense	$	(2,701	)
Foreign exchange forward contracts	4,955			Cost of products sold	4,968
Foreign exchange forward contracts	255			SG&A expenses	721
Commodity contracts	829			Cost of products sold	90
Total	$	4,191			$	3,078



Derivatives in Cash Flow Hedging
(in thousands)	Classification of Gains (Losses)	Ineffective Portion Recognized in Income

Foreign exchange forward contracts	Other expense (income), net	$	592
Commodity contracts	Interest expense	(20		)
Total		$	572

The following tables summarize the statements of operations impact of the Company’s hedges of net investments for the three and nine months ended September 30, 2013 and 2012:



Three Months Ended September 30, 2013
Derivatives in Net Investment Hedging
(in thousands)	Gain (Loss) in AOCI			Classification of Gains (Losses)	Gain (Loss) Recognized in Income

Cross currency basis swaps	$	(49,614	)	Interest income	$	1,331
				Interest expense	755
Total	$	(49,614	)		$	2,086



Three Months Ended September 30, 2012
Derivatives in Net Investment Hedging
(in thousands)	Gain (Loss) in AOCI			Classification of Gains (Losses)	Gain (Loss) Recognized in Income

Cross currency basis swaps	$	(18,055	)	Interest income	$	1,167
				Interest expense	(182		)
Total	$	(18,055	)		$	985



Nine Months Ended September 30, 2013
Derivatives in Net Investment Hedging
(in thousands)	Gain (Loss) in AOCI			Classification of Gains (Losses)	Gain (Loss) Recognized in Income

Cross currency basis swaps	$	(23,464	)	Interest income	$	3,988
				Interest expense	497
Total	$	(23,464	)		$	4,485



Nine Months Ended September 30, 2012
Derivatives in Net Investment Hedging
(in thousands)	Gain (Loss) in AOCI		Classification of Gains (Losses)	Gain (Loss) Recognized in Income

Cross currency basis swaps	$	5,360	Interest income	$	2,800
			Interest expense	(1,800		)
Total	$	5,360		$	1,000

The following tables summarize the statements of operations impact of the Company’s hedges of fair value for the three and nine months ended September 30, 2013 and 2012:



Derivatives in Fair Value Hedging
	Classification	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	of Gains (Losses)	2013		2012		2013		2012

Interest rate swaps	Interest expense	$	251	$	789	$	163	$	2,274
Total		$	251	$	789	$	163	$	2,274

The following table summarizes the statements of operations impact of the Company’s hedges not designated as hedging for the three and nine months ended September 30, 2013 and 2012:



Derivatives Not Designated as Hedging
	Classification	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	of Gains (Losses)	2013			2012			2013		2012

Foreign exchange forward contracts (a)	Other expense (income), net	$	3,110		$	(5,033	)	$	6,193	$	(4,727	)
DIO equity option contracts	Other expense (income), net	8			406			20		229
Interest rate swaps	Interest expense	(7		)	(49		)	14		(136		)
Cross currency basis swaps (a)	Other expense (income), net	10,625			8,275			9,250		(3,841		)
Total		$	13,736		$	3,599		$	15,477	$	(8,475	)

(a) The gains and losses on these derivative transactions offset the gains and losses generated by the revaluation of the underlying non-functional currency balances which are recorded in “Other expense (income), net” on the Consolidated Statements of Operations.

Amounts recorded in AOCI related to cash flow hedging instruments for the three and nine months ended September 30, 2013 and 2012:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, net of tax)	2013			2012			2013			2012

Beginning balance	$	(18,781	)	$	(12,157	)	$	(17,481	)	$	(12,737	)

Changes in fair value of derivatives	(2,059		)	1,099			(3,562		)	3,411
Reclassifications to earnings from equity	526			(1,228		)	729			(2,960		)
Total activity	(1,533		)	(129		)	(2,833		)	451

Ending balance	$	(20,314	)	$	(12,286	)	$	(20,314	)	$	(12,286	)

Amounts recorded in AOCI related to hedges of net investments in foreign operations for the three and nine months ended September 30, 2013 and 2012:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, net of tax)	2013			2012			2013			2012

Beginning balance	$	(143,407	)	$	(173,764	)	$	(71,358	)	$	(143,730	)

Foreign currency translation adjustment	141,410			106,541			40,787			58,068
Changes in fair value of:
Foreign currency debt	(2,687		)	(2,811		)	9,831			1,251
Derivative hedge instruments	(30,464		)	(11,086		)	(14,408		)	3,291
Total activity	108,259			92,644			36,210			62,610

Ending balance	$	(35,148	)	$	(81,120	)	$	(35,148	)	$	(81,120	)