Derivative Instruments, Hedging Activities and Fair Value (Tables)

9 Months Ended

Sep. 30, 2012

Derivative Instruments, Hedging Activities And Fair Value

Schedule of fair value of outstanding derivative contracts

The fair values of outstanding derivative contracts recorded as assets and liabilities on the Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011 were as follows:

Asset Derivatives

Liability Derivatives

(In thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

September 30, 2012

Derivatives designated as hedging instruments:

Cross currency interest rate swaps

Other assets

49,717

Other liabilities

12,700

Derivatives not designated as hedging instruments:

Foreign currency forward exchange contracts

Other current assets

1,177

Other current liabilities

3,346



	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
December 31, 2011
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	274	Other current liabilities	$	—
Cross currency interest rate swaps	Other assets	44,636		Other liabilities	1,792
Total derivatives designated as hedging instruments		$	44,910		$	1,792

Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	2,912	Other current liabilities	$	1,207

Schedule of effect of derivative instruments

The effect of derivative instruments on the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011 was as follows:

Derivatives Designated as Hedging Instruments



(In thousands)	Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion		Location of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
Three Months Ended September 30, 2012:
Foreign currency forward exchange contracts	$	(137	)	Cost of services and products sold	$	2		$	—
Cross-currency interest rate swaps	(865		)		—		Cost of services and products sold	(17,485		)	(a)
	$	(1,002	)		$	2		$	(17,485	)

Three Months Ended September 30, 2011:
Foreign currency forward exchange contracts	$	(154	)		$	—		$	—
Cross-currency interest rate swaps	10,616				—		Cost of services and products sold	19,581			(a)
	$	10,462			$	—		$	19,581

(a) These gains (losses) offset foreign currency fluctuation effects on the debt principal.



(In thousands)	Amount of Gain (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivative - Effective Portion			Location of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income - Effective Portion		Location of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing	Amount of Gain (Loss) Recognized in Income on Derivative - Ineffective Portion and Amount Excluded from Effectiveness Testing
Nine Months Ended September 30, 2012:
Foreign currency forward exchange contracts	$	(320	)	Cost of services and products sold	$	258		$	—
Cross-currency interest rate swaps	2,914				—		Cost of services and products sold	(8,740		)	(a)
	$	2,594			$	258		$	(8,740	)

Nine Months Ended September 30, 2011:
Foreign currency forward exchange contracts	$	(853	)		$	—		$	—
Cross-currency interest rate swaps	19,745				—		Cost of services and products sold	(3,876		)	(a)
	$	18,892			$	—		$	(3,876	)

(a) These gains (losses) offset foreign currency fluctuation effects on the debt principal.

Derivatives Not Designated as Hedging Instruments



	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative for the Three Months Ended September 30 (a)
(In thousands)	Location of Gain (Loss) Recognized in Income on Derivative	2012			2011
Foreign currency forward exchange contracts	Cost of services and products sold	$	(3,186	)	$	7,507

(a) These gains (losses) offset amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures.



	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative for the Nine Months Ended September 30 (a)
(In thousands)	Location of Gain (Loss) Recognized in Income on Derivative	2012			2011
Foreign currency forward exchange contracts	Cost of services and products sold	$	(681	)	$	430

(a) These gains (losses) offset amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures.

Summary of foreign currency forward exchange contracts, by major currency

The following tables summarize, by major currency, the contractual amounts of the Company’s foreign currency forward exchange contracts in U.S. dollars at September 30, 2012 and December 31, 2011. The “Buy” amounts represent the U.S. dollar equivalent of commitments to purchase foreign currencies, and the “Sell” amounts represent the U.S. dollar equivalent of commitments to sell foreign currencies. The recognized gains and losses offset amounts recognized in cost of services and products sold principally as a result of intercompany or third party foreign currency exposures.

Contracted Amounts of Foreign Currency Forward Exchange Contracts Outstanding at September 30, 2012:



(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	1,457	October 2012	$	(6	)
British pounds sterling	Buy	1,711		October 2012 through December 2012	1
Euros	Sell	236,054		October 2012 through December 2012	(2,362		)
Euros	Buy	106,601		October 2012	12
Other currencies	Sell	2,485		October 2012	(32		)
Other currencies	Buy	48,102		October 2012	218
Total		$	396,410		$	(2,169	)

Contracted Amounts of Foreign Currency Forward Exchange Contracts Outstanding at December 31, 2011:



(In thousands)	Type	U.S. Dollar Equivalent		Maturity	Recognized Gain (Loss)
British pounds sterling	Sell	$	18,350	January 2012	$	(20	)
British pounds sterling	Buy	4,364		January 2012	(12		)
Euros	Sell	178,889		January 2012 through October 2012	2,345
Euros	Buy	105,247		January 2012 through April 2012	(878		)
Other currencies	Sell	2,957		January 2012 through March 2012	62
Other currencies	Buy	14,656		January 2012	235
Total		$	324,463		$	1,732

Summary of notional amount of cross-currency interest rate swaps



			Interest Rates
(In millions)	Contractual Amount		Receive	Pay
Maturing 2018	$	250.0	Fixed U.S. dollar rate	Fixed euro rate
Maturing 2020	220.0		Fixed U.S. dollar rate	Fixed British pound sterling rate
Maturing 2013	1.8		Floating U.S. dollar rate	Fixed Indian rupee rate

Schedule of fair value of financial instruments

The following table indicates the fair value hierarchy of the financial instruments of the Company at September 30, 2012 and December 31, 2011:

Level 2 Fair Value Measurements



(In thousands)	September 30 2012		December 31 2011
Assets
Foreign currency forward exchange contracts	$	1,177	$	3,186
Cross-currency interest rate swaps	49,717		44,636
Liabilities
Foreign currency forward exchange contracts	3,346		1,207
Cross-currency interest rate swaps	12,700		1,792

Reconciliation of liabilities measured on a recurring basis using unobservable inputs (Level 3)

The following table reconciles the beginning and ending balances for liabilities measured on a recurring basis using unobservable inputs (Level 3) for the three and nine months ended September 30:



	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2012		2011		2012		2011
Balance at beginning of period	$	—	$	—	$	—	$	3,872
Fair value adjustments included in earnings	—		—		—		(3,966		)
Effect of exchange rate changes	—		—		—		94
Balance at end of period	$	—	$	—	$	—	$	—

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

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- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

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- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

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