Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities [Text Block]

Derivative Instruments and Hedging Activities

Derivative Financial Instruments

The Company uses derivative financial instruments, primarily forward exchange contracts, to manage a majority of the foreign currency exchange exposure associated with net short-term foreign currency denominated assets and liabilities that exist as part of its ongoing business operations that are denominated in a currency other than the functional currency of the subsidiary. The exposures relate primarily to the gain or loss recognized in earnings from the settlement of current foreign denominated assets and liabilities.

The Company does not enter into derivative financial instruments for trading or speculative purposes. The forward exchange contracts generally have maturities of 90 days or less and are not designated as hedging instruments. Forward exchange contracts are marked-to-market at the end of each reporting period, using quoted prices for similar assets or liabilities in active markets (Level 2 inputs), with gains and losses recognized in other income offset by the gains or losses resulting from the settlement of the underlying foreign currency denominated assets and liabilities.

Cash Flow Hedges

The Company hedges a portion of anticipated operating expenses denominated in the Indian rupee with forward exchange contracts that have maturities of twelve months or less and are designated as hedging instruments. The forward exchange contracts are marked-to-market at the end of each reporting period, using quoted prices for similar assets or liabilities in active markets (Level 2 inputs). The effective portion of the derivative's gain or loss is initially reported as a component of accumulated other comprehensive income (loss) and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion of the gain or loss is reported in earnings immediately.

The forward contract receivables (payables) are included in the Condensed Consolidated Balance Sheets under the captions "Prepaid expenses and other current assets" and "Accrued expenses and other liabilities" as applicable. The notional values represent the amount of foreign currencies to be purchased or sold at maturity and does not represent our exposure on these contracts. Net foreign currency exchange gains (losses) are included in the Condensed Consolidated Statements of Income under the caption "Interest income and other, net."

Derivative Instruments in the Condensed Consolidated Balance Sheets

The gross notional and fair value of derivative financial instruments in the Condensed Consolidated Balance Sheets were recorded as follows:

	September 30, 2012						December 31, 2011
	Gross Notional		Prepaid Expenses and Other Current Assets		Accrued Expenses and Other Liabilities		Gross Notional		Prepaid Expenses and Other Current Assets		Accrued Expenses and Other Liabilities
Foreign currency forward contract not designated as hedging instruments	$	57,598	$	684	$	—	$	64,451	$	—	$	364
Foreign currency forward contract designated as hedging instruments	$	17,967	$	1,126	$	—	$	42,373	$	—	$	4,046

Effects of Derivative Instruments on Income and Other Comprehensive Income

The before-tax effect of derivative instruments not designated as hedging instruments on the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2012 and 2011 were as follows:

	Gain (Loss) Recognized in Income on Derivative
		Three Months Ended September 30,					Nine Months Ended September 30,
	Location	2012		2011			2012		2011
Foreign exchange contracts not designated as hedges	Interest income and other, net	$	927	$	(2,586	)	$	1,430	$	(637	)

The before-tax effect of derivative instruments in cash flow hedging for the three and nine months ended September 30, 2012 and 2011 were as follows:

	Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative (Effective Portion)					Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)						Gain (Loss) Recognized in Income Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)
	Three Months Ended September 30,						Three Months Ended September 30,						Three Months Ended September 30,
	2012		2011			Location	2012			2011		Location	2012		2011
Foreign exchange contracts designated as hedges	$	973	$	(2,801	)	General and administration	$	(985	)	$	54	Interest income and other, net	$	546	$	383

	Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivative (Effective Portion)					Gain (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion)						Gain (Loss) Recognized in Income Derivative (Ineffective portion and Amount Excluded from Effectiveness Testing)
	Nine Months Ended September 30,						Nine Months Ended September 30,						Nine Months Ended September 30,
	2012		2011			Location	2012			2011		Location	2012		2011
Foreign exchange contracts designated as hedges	$	556	$	(2,906	)	General and administration	$	(3,700	)	$	120	Interest income and other, net	$	1,703	$	1,496