Derivatives and Other Financial Instruments

9 Months Ended

Sep. 30, 2011

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Other Financial Instruments

Note 10.     Derivatives and Other Financial Instruments

The Company has exposure to certain risks relating to its ongoing business operations, including financial, market, political and economic risks.  The following discussion provides information regarding our exposure to the risks of changing energy prices and foreign currency exchange rates.  The Company has not entered into these contracts for trading or speculative purposes in the past, nor do we currently anticipate entering into such contracts for trading or speculative purposes in the future.  The natural gas and foreign exchange contracts are used to mitigate uncertainty and volatility, and to cover underlying exposures.

Foreign Currency Forward Contracts

We manage the risk of changes in foreign currency exchange rates, primarily at our Malaysian operation, through the use of foreign currency contracts.  Foreign exchange contracts are used to protect the Company from the risk that the eventual cash flows resulting from transactions in foreign currencies, including sales and purchases transacted in a currency other than the functional currency, will be adversely affected by changes in exchange rates.  We report the fair value of the derivatives on our balance sheet and changes in the fair value are recognized in earnings in the period of the change.

At September 30, 2011, we marked these contracts to market, recording $70,000 as a current liability on the balance sheet.  For the three and nine month periods ended September 30, 2011, we recorded a net loss on these contracts of $70,000 and $85,000, respectively, as a component of our net income.  For the three and nine month periods ended September 30, 2010, we recorded a net gain of $30,000 and $143,000, respectively, as a component of our net loss.

The following table summarizes the gross fair market value of all derivative instruments, which are not designated as hedging instruments and their location in our Condensed Consolidated Balance Sheet:

(In thousands)
Asset Derivatives
			September 30,		December 31,
Derivative Instrument	Location		2011		2010
Foreign Currency Exchange Contracts	Other Current Assets	$	-	$	11
		$	-	$	11
Liability Derivatives
			September 30,		December 31,
Derivative Instrument	Location		2011		2010
Foreign Currency Exchange Contracts	Accrued Expenses		70		-
		$	70	$	-

The following table summarizes the impact of the Company’s derivatives on the condensed consolidated financial statements of operations for the three and nine month periods ended September 30, 2011 and 2010:

			Amount of (Loss) Gain Recognized in Income (In thousands)
	Location of (Loss)		Three Months Ended				Nine Months Ended
Derivative	Gain on Derivative		September 30,				September 30,
Instrument	Instrument		2011		2010		2011		2010
Foreign Currency    Exchange Contracts	Other (Expense) Income	$	(70)	$	30	$	(85)	$	143