Derivatives and Hedging

3 Months Ended

Mar. 31, 2013

Derivatives and Hedging

16. Derivatives and Hedging

Foreign Currency Exchange Contracts

The Company accounts for its foreign currency exchange contracts in accordance with ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). ASC 815 requires the recognition of all derivatives as either assets or liabilities on the balance sheet, the measurement of those instruments at fair value and the recognition of changes in the fair value of derivatives in earnings in the period of change, unless the derivative qualifies as an effective hedge that offsets certain exposures.

In the normal course of business, the Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to transactions of its international subsidiaries, including certain balance sheet exposures (payables and receivables denominated in foreign currencies). In addition, the Company is exposed to gains and losses resulting from the translation of the operating results of the Company’s international subsidiaries into U.S. dollars for financial reporting purposes. As part of its strategy to manage the level of exposure to the risk of fluctuations in foreign currency exchange rates, the Company uses derivative financial instruments in the form of foreign currency forward contracts and put and call option contracts (“foreign currency exchange contracts”) to hedge transactions that are denominated primarily in Japanese Yen, British Pounds, Euros, Canadian Dollars, Australian Dollars and Korean Won. Foreign currency exchange contracts are used only to meet the Company’s objectives of minimizing variability in the Company’s operating results arising from foreign exchange rate movements. The Company does not enter into foreign currency exchange contracts for speculative purposes. Foreign currency exchange contracts usually mature within twelve months from their inception.

The Company did not designate any foreign currency exchange contracts as derivatives that qualify for hedge accounting under ASC 815. At March31, 2013 and December31, 2012, the notional amounts of the Company’s foreign currency exchange contracts used to hedge the exposures discussed above were approximately $170,299,000 and $137,125,000, respectively. The Company estimates the fair values of foreign currency exchange contracts based on pricing models using current market rates, and records all derivatives on the balance sheet at fair value with changes in fair value recorded in the statements of operations.

The following table summarizes the fair value of derivative instruments by contract type as well as the location of the asset and/or liability on the consolidated condensed balance sheets at March31, 2013 and December31, 2012 (in thousands):

	Asset Derivatives
	March31, 2013		December31, 2012
Derivatives not designated as hedging instruments	BalanceSheetLocation	FairValue	BalanceSheetLocation	FairValue
Foreign currency exchange contracts	Othercurrentassets	$6,234	Othercurrent assets	$5,011

	Liability Derivatives
	March 31, 2013			December31, 2012
Derivatives not designated as hedging instruments	BalanceSheetLocation	FairValue	BalanceSheetLocation		FairValue
Foreign currency exchange contracts	Accountspayableand accrued expenses	$407	Accountspayableand accrued expenses		$1,046

The following table summarizes the location of gains in the consolidated condensed statements of operations that were recognized during the three months ended March31, 2013 and 2012, respectively, in addition to the derivative contract type (in thousands):

		AmountofNet GainRecognizedin IncomeonDerivative Instruments
Derivatives not designated as hedging instruments	Locationofnet gainrecognizedin incomeon derivative instruments	Three months ended March31,
		2013	2012
Foreigncurrencyexchangecontracts	Otherincome, net	$7,848	$5,685

The net realized and unrealized net gains and losses noted in the table above for the three months ended March31, 2013 and 2012 were used by the Company to offset actual foreign currency transactional net gains and losses associated with the translation of foreign currencies in operating results.