Foreign Currency Exchange Rate Risk

12 Months Ended

Dec. 31, 2012

Foreign Currency [Abstract]

Foreign Currency Exchange Rate Risk

Foreign Currency Exchange Rate Risk

The Company’s foreign businesses enter into contracts with customers and vendors that are denominated in currencies other than their functional currencies. To protect the functional currency equivalent cash flows associated with certain of these contracts, the Company enters into foreign currency forward contracts. The Company’s activities involving foreign currency forward contracts are designed to hedge the changes in the functional currency equivalent cash flows due to movements in foreign exchange rates compared to the functional currency. The foreign currencies hedged are primarily the euro and the Swedish kroner. The Company manages exposure to counterparty non-performance credit risk by entering into foreign currency forward contracts only with major financial institutions that are expected to fully perform under the terms of such contracts. Gains and losses on foreign currency forward contracts are recognized in income at the end of each reporting period based on the difference between the contract rate and the spot rate. The net amount of the gains and losses related to derivative instruments recorded in other expense for the year ended December 31, 2012, 2011 and 2010 were a gain of $5.1 million, a loss of $2.3 million and a loss of $0.7 million, respectively. In general, these losses are offset in the Consolidated Statement of Income by the reciprocal gains from the underlying assets or liabilities which originally gave rise to the exposure.

Notional amounts are used to measure the volume of foreign currency forward contracts and do not represent exposure to foreign currency gains or losses. The table below presents the net notional amounts of the Company’s outstanding foreign currency forward contracts by currency at December 31, 2012 and 2011 (in thousands):

	Year Ended December 31,
	2012		2011
Swedish kroner	$	98,385	$	18,091
British pound sterling	15,619		3,050
Australian dollar	7,022		609
Japanese yen	5,157		3,581
Euro	2,232		19,640
Other	622		174
	$	129,037	$	45,145

At December 31, 2012, the Company’s foreign currency forward contracts, in general, had maturities of 6 months or less.

The carrying amount of our derivative instruments included in the Consolidated Balance Sheets are as follows (in thousands):

	December 31, 2012				December 31, 2011
	Other Current Assets		Other Current Liabilities		Other Current Assets		Other Current Liabilities
Foreign exchange contracts	$	2,106	$	229	$	245	$	640