Derivatives and Other Financial Instruments

3 Months Ended

Mar. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Other Financial Instruments

Note 9. Derivatives and Other Financial Instruments

We have exposure to certain risks relating to our ongoing business operations, including financial, market, political and economic risks. The following discussion provides information regarding our exposure to the risks of changes in foreign currency exchange rates. hawse have 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 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 consolidated balance sheet and changes in the fair value are recognized in earnings in the period of the change.

At March 31, 2012, we marked these contracts to market, recording a net expense of approximately $7,000, as a component of our year to date net income and as a current liability on the consolidated balance sheet. At March 31, 2011, we marked these contracts to market, recording an expense of approximately $3,000 as a component of our year to date net income and as a current liability on the consolidated balance sheet.

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
			March 31,			December 31,
Derivative Instrument	Location		2012			2011
Foreign Currency Exchange Contracts	Other Current Assets	$		-	$	16
		$		-	$	16
	Liability Derivatives
			March 31,			December 31,
Derivative Instrument	Location		2012			2011
Foreign Currency Exchange Contracts	Accrued Expenses			7		-
		$		7	$	-

The following table summarizes the impact of the Company’s derivatives on the condensed consolidated financial statements of income for the quarters ended March 31, 2012 and 2011:

		Amount of (Loss) Gain Recognized in Income
		(In thousands)
	Location of (Loss)	Three Months Ended
Derivative	Gain on Derivative	March 31,
Instrument	Instrument		2012			2011
Foreign Currency	Other Expense:Loss on
Exchange Contracts	foreign currency exchange
	rate
		$		(7)	$	(3)