XML 36 R9.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Derivative Instruments and Hedging Activities Disclosure
 6 Months Ended
Jun. 30, 2011
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure
Derivative Instruments and Hedging Activities Disclosure
4.   Derivative financial instruments are utilized by the Company to reduce foreign currency exchange risks. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. The Company does not enter into financial instruments for trading or speculative purposes. The derivative financial instruments include fair value and cash flow hedges of foreign currency exposures. The change in values of the fair value foreign currency hedges offset exchange rate fluctuations on the foreign currency-denominated intercompany loans and obligations. The Company presently hedges exposures in the Euro, Canadian dollar, British pound sterling, Swiss franc, Swedish krona, Norwegian krone, Mexican peso and Chinese yuan generally for transactions expected to occur within the next 12 months. The notional amount of these foreign currency derivative instruments at December 31, 2010 and June 30, 2011 was $234,600 and $244,115, respectively. The counterparties to each of these agreements are major commercial banks.
 
    The Company uses foreign currency forward contracts as hedges of the fair value of certain non-U.S. dollar denominated asset and liability positions, primarily accounts receivable and debt. Gains and losses resulting from the impact of currency exchange rate movements on these forward contracts are recognized in the accompanying Consolidated Statements of Operations in the period in which the exchange rates change and offset the foreign currency gains and losses on the underlying exposure being hedged.
    Foreign currency forward contracts are also used to hedge variable cash flows associated with forecasted sales and purchases denominated in currencies that are not the functional currency of certain entities. The forward contracts have maturities of less than twelve months pursuant to the Company’s policies and hedging practices. These forward contracts meet the criteria for and have been designated as cash flow hedges. Accordingly, the effective portion of the change in fair value of such forward contracts (approximately $(3,263) and $(6,284) as of December 31, 2010 and June 30, 2011, respectively) are recorded as a separate component of stockholders’ equity in the accompanying Consolidated Balance Sheets and reclassified into earnings as the hedged transactions occur.
 
    The Company assesses hedge ineffectiveness quarterly using the hypothetical derivative methodology. In doing so, the Company monitors the actual and forecasted foreign currency sales and purchases versus the amounts hedged to identify any hedge ineffectiveness. Any hedge ineffectiveness is recorded as an adjustment in the accompanying consolidated financial statements of operations in the period in which the ineffectiveness occurs. The Company also performs regression analysis comparing the change in value of the hedging contracts versus the underlying foreign currency sales and purchases, which confirms a high correlation and hedge effectiveness.
 
    The following table presents the location and amounts of derivative instrument fair values in the Condensed Consolidated Balance Sheets:
                                 
(assets)/liabilities   December 31, 2010     June 30, 2011  
Derivatives designated as hedging instruments
  Accrued liabilities   $ 3,413     Accrued liabilities   $ 6,532  
 
                               
Derivatives not designated as hedging instruments
  Accrued liabilities   $ 564     Accrued liabilities   $ 451  
    The following table presents the location and amount of gains and losses on derivative instruments in the Condensed Consolidated Statements of Operations:
                                                 
    Amount of Gain (Loss)     Amount of (Loss) Gain        
    Recognized in Other     Reclassified from     Amount of Gain (Loss)  
    Comprehensive Income on     Other Comprehensive Income     Recognized in Income on  
    Derivative (Effective Portion)     into Income (Effective Portion)     Derivative (Ineffective Portion)  
    Three     Three     Three     Three     Three     Three  
Derivatives   Months     Months     Months     Months     Months     Months  
Designated as   Ended     Ended     Ended     Ended     Ended     Ended  
Cash Flow Hedges   June 30, 2010     June 30, 2011     June 30, 2010     June 30, 2011     June 30, 2010     June 30, 2011  
Foreign exchange contracts
  $ 5,013     $ (434 )   $ 236     $ (566 )   $ (186 )   $ 24  
                                                 
    Six     Six     Six     Six     Six     Six  
Derivatives   Months     Months     Months     Months     Months     Months  
Designated as   Ended     Ended     Ended     Ended     Ended     Ended  
Cash Flow Hedges   June 30, 2010     June 30, 2011     June 30, 2010     June 30, 2011     June 30, 2010     June 30, 2011  
Foreign exchange contracts
  $ 7,563     $ (4,905 )   $ 1,565     $ (1,884 )   $ (215 )   $ (90 )
                                         
                    Amount of Gain (Loss) Recognized        
    Location of             in Income on Derivatives        
    Gain (Loss)     Three     Three     Six     Six  
Derivatives not   Recognized     Months     Months     Months     Months  
Designated as   in Income on     Ended     Ended     Ended     Ended  
Hedging Instruments   Derivatives     June 30, 2010     June 30, 2011     June 30, 2010     June 30, 2011  
Foreign exchange contracts
  Other income   $ 457     $ (22 )   $ (156 )   $ 107  
    The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within the different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
 
    Financial assets and liabilities recorded on the Condensed Consolidated Balance Sheets are categorized based on the inputs to the valuation techniques as follows:
 
    Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.
 
    Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
  a.   Quoted prices for similar assets or liabilities in active markets;
 
  b.   Quoted prices for identical or similar assets or liabilities in non-active markets;
 
  c.   Pricing models whose inputs are observable for substantially the full term of the asset or liability; and
 
  d.   Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.
    Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.
    The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2011, and December 31, 2010:
                                 
            Quoted Prices     Significant        
    Total     in Active Markets     Other     Significant  
    Derivative     for Identical     Observable     Unobservable  
    (Assets)     Assets     Inputs     Inputs  
Foreign Exchange Contracts   Liabilities     Level (1)     Level (2)     Level (3)  
June 30, 2011
  $ 6,983     $ —     $ 6,983     $ —  
December 31, 2010
  $ 3,977     $ —     $ 3,977     $ —  
    The land, building and certain manufacturing equipment located at Albany, Georgia are classified as “assets held for sale” at the lower of estimated fair value less costs to sell determined based on a signed Real Estate Purchase Agreement or carrying value. The carrying value of these assets is $8,155 at June 30, 2011.
 
    The Company has notes, secured by government-controlled banks, from certain of its customers in the PRC to settle trade accounts receivable which generally have maturities of six months or less. The fair value of the Company’s debt is based upon prices of similar instruments in the market place.
    The carrying amounts and fair values of the Company’s financial instruments are as follows:
                                 
    December 31, 2010     June 30, 2011  
    Carrying     Fair     Carrying     Fair  
    Amount     Value     Amount     Value  
Cash and cash equivalents
  $ 413,359     $ 413,359     $ 137,688     $ 137,688  
Notes receivable
    69,547       69,547       38,046       38,046  
Notes payable
    (146,947 )     (146,947 )     (136,170 )     (136,170 )
Current portion of long-term debt
    (5,885 )     (5,885 )     (21,458 )     (21,458 )
Long-term debt
    (320,724 )     (322,124 )     (324,440 )     (327,640 )
Derivative financial instruments
    (3,977 )     (3,977 )     (6,983 )     (6,983 )