Note 7 — Financial instruments

The Company uses derivative instruments for risk management purposes. Forward rate contracts are used to manage foreign currency transaction exposure. These derivative instruments are designated as cash flow hedges and are recorded on the balance sheet at fair market value. The effective portion of the gains or losses on derivatives is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. See Note 8, "Fair value measurement" for additional information.

The following table presents the location and fair values of derivative instruments designated as hedging instruments in the condensed consolidated balance sheet as of April 1, 2012 and December 31, 2011:


	April 1, 2012 Fair Value		December 31, 2011 Fair Value
	(Dollars in thousands)
Asset derivatives:
Foreign exchange contracts:
Other assets – current	$	1,432	$	204

Total asset derivatives	$	1,432	$	204


Liability derivatives:
Foreign exchange contracts:
Derivative liabilities – current	$	1,496	$	633

Total liability derivatives	$	1,496	$	633

The following table provides information as to the gains and losses attributable to derivatives in cash flow hedging relationships that were reported in other comprehensive income ("OCI"), and the location and amount of gains and losses attributable to such derivatives that were reclassified from accumulated other comprehensive income ("AOCI") in the condensed consolidated statement of income for the three months ended April 1, 2012 and March 27, 2011:


	After Tax Gain/(Loss) Recognized in OCI
	April 1, 2012		March 27, 2011
	(Dollars in thousands)
Interest rate contracts	$	2,386	$	1,657
Foreign exchange contracts		74		249

Total	$	2,460	$	1,906


	Pre-Tax (Gain)/Loss Reclassified from AOCI into Income
	April 1, 2012			March 27, 2011
	(Dollars in thousands)
Interest rate contracts:
Interest expense	$	3,751		$	3,720
Foreign exchange contracts
Cost of goods sold		(897	)		(584	)
Income from discontinued operations		—			(435	)

Total	$	2,854		$	2,701

For the three months ended April 1, 2012 and March 27, 2011, there was no ineffectiveness related to the Company's derivatives.

In 2011, the Company terminated its interest rate swap covering a notional amount of $350 million designated as a hedge against the variability of the cash flows in the interest payments under the term loan. At April 1, 2012, the Company had $4.6 million, net of tax, recorded in AOCI associated with this interest rate swap, which will be amortized as interest expense over the remaining life of the original term of the hedged obligation, which expires in September 2012.

Based on interest rates and exchange rates at April 1, 2012, approximately $4.8 million of unrealized losses, net of tax, within AOCI are expected to be reclassified from AOCI during the next twelve months. However, the actual amount reclassified from AOCI could vary due to future changes in exchange rates.