Derivative Financial Instruments

9 Months Ended

Sep. 30, 2012

Derivative Financial Instruments [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

(6) DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into foreign currency forward contracts in order to reduce the impact of certain foreign currency fluctuations on sales denominated in a foreign currency. Derivatives are not used for trading or speculative activities. Firmly committed transactions and the related receivables may be hedged with forward exchange contracts. Gains and losses arising from foreign currency forward contracts are recorded in other (income) expense, net as offsets of gains and losses resulting from the underlying hedged transactions. A realized loss of $6,000 was recorded in the three- and six months ended September 30, 2012. A realized gain of $85,000 was recorded in the three- and six months ended September 30, 2011. As of September 30, 2012 and 2011, the notional amount of open foreign currency forward contracts was $5,131,000 and $7,281,000, respectively. The related unrealized loss was $91,000 at September 30, 2012 and the related unrealized gain was $366,000 at September 30, 2011. The Company believes that it does not have significant counterparty credit risks as of September 30, 2012.

The following table shows the fair value of the foreign currency forward contracts designated as hedging instruments and included in the Company’s condensed consolidated balance sheet as of September 30, 2012 and 2011 (in thousands):

	Fair Value of Derivative Instruments
		Fair Value
	Balance Sheet Location	September 30, 2012		September 30, 2011
Foreign currency foreign contracts	Other current liabilities	$	91	$	0
Foreign currency forward contracts	Other current assets		0		366