Foreign Currency Exchange Risk Management

3 Months Ended

Mar. 31, 2013

Foreign Currency Exchange Risk Management

Foreign Currency Exchange Risk Management

(9)  Foreign Currency Exchange Risk Management

Prior to December 2012, we used Euro-denominated debt as a non-derivative financial instrument to partially offset the Company’s business exposure to foreign currency exchange risk attributable to our net investments in Europe. Our focus was to manage the foreign currency exchange risks associated with our European subsidiaries.  To help protect the Company’s net investment in certain of its European subsidiary operations from adverse changes in foreign currency exchange rates, management denominated a portion of the Euro-denominated debt in the same functional currency used by the European subsidiaries. In December 2012, the Company paid off its remaining balance in the Euro-denominated debt, and the hedging relationship no longer exists.

The effective portion of the net foreign investment hedge was reported in accumulated other comprehensive income (loss) (“AOCI”) as part of the cumulative translation adjustment. Any ineffective portion of the net foreign investment hedge was recognized in earnings as other income (expense) during the period of change. Effectiveness of the hedging relationship was measured and designated at the beginning of each month by comparing the outstanding balance of the Euro-denominated debt to the carrying value of the designated net equity investments.

The effect of the non-derivative instrument qualifying and designated as a hedging instrument in net foreign investment hedges on the consolidated financial statements for the three-month month periods ended March 31, 2013 and 2012 was as follows (in thousands):

							Amount of Gain (Loss)
							Recognized in Income
	Amount of Gain (Loss)						(Ineffective Portion and
	Recognized in AOCI						Amount Excluded from
Non-Derivative	(Effective Portion)					Location of Gain (Loss)	Effectiveness Testing)
Instrument in	Three Months Ended					Reclassified from	Three Months Ended
Net Investment	March 31,					AOCI into Income	March 31,
Hedging Relationship	2013		2012			(Effective Portion)	2013		2012
Euro-denominated debt	$	—	$	(398	)	Other income (expense)	$	—	$	—