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Financial Instruments

12 Months Ended

Dec. 31, 2011

7.	Financial Instruments

The carrying amounts of the following assets and liabilities meeting the definition of a financial instrument approximate their fair values due to the short period to maturity of the instruments:

•

Cash and cash equivalents;

•

Notes receivable;

•

Deposits;

•

Other receivables; and

•

Short-term loans payable.

Long-term Debt

The following financial instruments are measured at fair value at December 31st for disclosure purposes.


	2011				2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
7.875% Senior Notes	$	250,000	$	253,750	$	250,000	$	266,563
6.50% Convertible Senior Notes, net of unamortized discounts		33,537		34,589		33,368		36,379
2010 Credit Facility		7,706		7,973		—		—
Other notes		5,067		4,184		4,297		3,600

The fair values of the Senior Notes and the Convertible Notes are based on a third party’s estimated bid price. The fair values of the revolving credit facility and the other long-term notes are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company that market participants would use in pricing the debt.

Derivative Instruments

Interest rate swaps. To reduce our exposure to interest rate changes on variable-rate debt, we entered into interest rate swap agreements in 2007. These swaps effectively converted $150 million of our variable-rate term loan facility to a fixed interest rate. These swaps were designated and qualified as cash flow hedges. In 2010, in conjunction with repayment of our remaining outstanding term loans, we settled these swaps and reclassified $6.8 million from accumulated other comprehensive loss to miscellaneous expense.

Foreign currency forward contracts. We manage foreign currency risks principally by entering into forward contracts to mitigate the impact of currency fluctuations on transactions. These forward contracts are not formally designated as hedges. The fair value of these contracts is based on market prices for comparable contracts. The notional amount of foreign currency forward contracts was $249.3 million at December 31, 2011, and $187.3 million at December 31, 2010.

The following table presents the fair value of derivative instruments on our consolidated balance sheets at December 31st:


	2011			2010			Balance Sheet Location
	(Dollars in thousands)
Derivatives not designated as hedging instruments:
Asset derivatives:
Foreign currency forward contracts	$	6,491		$	—		Other current assets
Foreign currency forward contracts		—			1,261		Accrued expenses and other current liabilities
Total fair value	$	6,491		$	1,261
Liability derivatives:
Foreign currency forward contracts	$	(266	)	$	—		Other current assets
Foreign currency forward contracts		—			(1,501	)	Accrued expenses and other current liabilities
Total fair value	$	(266	)	$	(1,501	)

The inputs to the valuation techniques used to measure fair value are classified into the following categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The carrying amount, fair value, and classification within the fair value hierarchy of these financial instruments at December 31st were as follows:


	2011
	Level 1		Level 2		Level 3		Total		2010
	(Dollars in thousands)
Assets:
Foreign currency forward contracts, net	$	—	$	6,225	$	—	$	6,225	$	—
Liabilities:
Foreign currency forward contracts, net		—		—		—		—		(240	)

The following table presents the effect of derivative instruments on our consolidated financial performance:


	Amount of Gain (Loss) Recognized in OCI					Amount of Gain (Loss) Reclassified from AOCL into Income					Location of Gain (Loss) Reclassified from AOCL into Income
	2011		2010			2011		2010			Location of Gain (Loss) Reclassified from AOCL into Income
	(Dollars in thousands)
Derivatives in cash flow hedging relationships:
Interest rate swaps						$	—	$	(4,885	)	Interest expense
							—		(6,849	)	Miscellaneous expense
Total	$	—	$	(2,218	)	$	—	$	(11,734	)


	Amount of Gain (Loss) Recognized in Income					Location of Gain (Loss) in Income
	2011			2010		Location of Gain (Loss) in Income
	(Dollars in thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	$	(6,693	)	$	5,553	Foreign currency losses, net