Derivative Financial Instruments

9 Months Ended

Sep. 30, 2013

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

7. DERIVATIVE FINANCIAL INSTRUMENTS

We transact business in various foreign countries and are therefore exposed to foreign currency exchange rate risk inherent in revenues, costs, and monetary assets and liabilities denominated in non-functional currencies. We have entered into foreign currency exchange forward contracts and currency swap derivative instruments to selectively protect against volatility in the value of non-functional currency denominated monetary assets and liabilities, and of future cash flows caused by changes in foreign currency exchange rates. We do not designate these derivative instruments as hedging instruments under the accounting standards for derivatives and hedging. Accordingly, these instruments are recorded at fair value as a derivative asset or liability on the balance sheet with their corresponding change in fair value recognized in ‘Foreign currency transaction (gains) losses, net’ in our condensed consolidated statements of income. For purposes of the condensed consolidated statement of cash flows,  we classify the cash flows at settlement from undesignated instruments in the same category as the cash flows from the related hedged items, generally within ‘Cash provided by (used in) operating activities’. See Note 6 – “Fair Value Measurements” for further details regarding the fair values of the corresponding derivative assets and liabilities.

The following table summarizes the notional amounts of the outstanding foreign currency exchange contracts at September 30, 2013 and December 31, 2012. The notional amounts of the derivative financial instruments shown below are denominated in their U.S. dollar equivalents and represent the amount of all contracts of the foreign currency specified. These notional values do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the foreign currency exchange risks.

	September 30,		December 31,
($ thousands)	2013		2012
Foreign currency exchange forward contracts by currency:
Japanese Yen	$	73,584	$	112,500
Euro		48,063		5,159
Pound Sterling		24,653		8,742
Singapore Dollar		23,256		-
Mexican Peso		18,700		11,400
Russian Ruble		11,892		-
Australian Dollar		5,682		4,178
New Taiwan Dollar		4,353		-
South African Rand		3,250		-
South Korean Won		2,083		-
Swedish Krona		1,959		-
Canadian Dollar		1,698		-
Indian Rupee		1,600		-
Hong Kong Dollar		1,451		-
New Zealand Dollar		1,200		1,137
Norwegian Krone		551		-
Total notional value, net	$	223,975	$	143,116
Latest maturity date	December 2015		December 2015

The following table presents the amounts affecting the consolidated statements of income from derivative instruments for the three and nine months endedSeptember 30, 2013 and 2012:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ thousands)	2013		2012		2013		2012		Location of (Gain) Loss Recognized in Income on Derivatives
Derivatives not designated as hedging instruments:
Foreign currency exchange forwards	$	2,588	$	2,793	$	(8,064)	$	4,977	Foreign currency transaction (gains) losses, net

Foreign currency transaction gains and losses recognized on  the condensed consolidated statements of income include both realized and unrealized gains/losses from underlying foreign currency activity and derivative contracts. These gains and losses are reported on a net basis. For the three months ended September 30, 2013, the net loss recognized of $1.0 million recorded on  the condensed consolidated statements of income is comprised of a $2.6 million net loss associated with our derivative instruments partially offset by a $1.6 million net gain associated with exposure from day-to-day business transactions in various foreign currencies. For the three months ended September 30, 2012, the immaterial net loss recorded onthe condensed consolidated statements of income is comprised ofa  $2.8 million net loss associated with our derivative instruments fully offset by a  $2.8 million net gain associated with exposure from day-to-day business transactions in various foreign currencies. For the nine months ended September 30, 2013, the net loss recognized of $4.5 million recorded on  the condensed consolidated statements of income is comprised ofa  $12.6 million net loss associated with exposure from day-to-day business transactions in various foreign currencies partially offset by a $8.1 million net gain associated with our derivative instruments. For the nine months ended September 30, 2012, the net loss recognized of $2.7 million recorded on  the condensed consolidated statements of income is comprisedof a $5.0 million net loss associated with our derivative instruments partially offset by a $2.3 million net gain associated with exposure from day-to-day business transactions in various foreign currencies.