Financial Instruments Measured at Fair Value

12 Months Ended

Dec. 31, 2011

Financial Instruments Measured at Fair Value [Abstract]

Financial Instruments Measured At Fair Value [Text Block]

Financial Instruments Measured at Fair Value

The following table presents assets/(liabilities) measured at fair value on a recurring basis at December 31, 2011:

	Level 1		Level 2			Level 3		Total
Cash equivalents	$	—	$	—		$	—	$	—
Available-for-sale securities	45,421		—			—		45,421
Interest rate swaps	—		(3,009		)	—		(3,009		)
Foreign exchange contracts	—		(649		)	—		(649		)
	$	45,421	$	(3,658	)	$	—	$	41,763

The following table presents assets/(liabilities) measured at fair value on a recurring basis at December 31, 2010:

	Level 1		Level 2			Level 3		Total
Cash equivalents	$	254,296	$	282,900		$	—	$	537,196
Available-for-sale securities	68,746		—			—		68,746
Interest rate swaps	—		14,082			—		14,082
Foreign exchange contracts	—		(494		)	—		(494		)
	$	323,042	$	296,488		$	—	$	619,530

There were no transfers of financial instruments between the three levels of fair value hierarchy between December 31, 2011 and 2010.

Available-For-Sale Securities

The company has a 2.0% equity ownership interest in WPG Holdings Co., Ltd. ("WPG") and an 8.4% equity ownership interest in Marubun Corporation ("Marubun"), which are accounted for as available-for-sale securities.

The fair value of the company's available-for-sale securities is as follows at December 31:

	2011					2010
	Marubun			WPG		Marubun		WPG
Cost basis	$	10,016		$	10,798	$	10,016	$	10,798
Unrealized holding gain (loss)	(371		)	24,978		3,726		44,206
Fair value	$	9,645		$	35,776	$	13,742	$	55,004

The company concluded that the decline in its Marubun investment is temporary and, accordingly, has not recognized a loss in the consolidated statements of operations. In making this determination, the company considered its intent and ability to hold the investment until the cost is recovered, the financial condition and near-term prospects of Marubun, the magnitude of the loss compared to the investment's cost, and publicly available information about the industry and geographic region in which Marubun operates. In addition, the fair value of the Marubun investment has been below the cost basis for less than twelve months.

The fair values of these investments are included in "Other assets" in the accompanying consolidated balance sheets, and the related unrealized holding gains or losses are included in "Other" in the shareholders' equity section in the accompanying consolidated balance sheets.

Derivative Instruments

The company uses various financial instruments, including derivative financial instruments, for purposes other than trading.  Derivatives used as part of the company's risk management strategy are designated at inception as hedges and measured for effectiveness both at inception and on an ongoing basis.

The fair values of derivative instruments in the consolidated balance sheets are as follows at December 31:

	Asset/(Liability) Derivatives
		Fair Value
	Balance Sheet Location	2011			2010
Derivative instruments designated as hedges:
Interest rate swaps designated as fair value hedges	Other assets	$	—		$	14,756
Interest rate swaps designated as fair value hedges	Other liabilities	—			(674		)
Interest rate swaps designated as cash flow hedges	Other liabilities	(3,009		)	—
Foreign exchange contracts designated as cash flow hedges	Other current assets	73			271
Foreign exchange contracts designated as cash flow hedges	Accrued expenses	(641		)	(177		)
Total derivative instruments designated as hedging instruments		(3,577		)	14,176
Derivative instruments not designated as hedges:
Foreign exchange contracts	Other current assets	2,218			1,778
Foreign exchange contracts	Accrued expenses	(2,299		)	(2,366		)
Total derivative instruments not designated as hedging instruments		(81		)	(588		)
Total		$	(3,658	)	$	13,588

The effect of derivative instruments on the consolidated statement of operations is as follows for the years ended December 31:

	Gain/(Loss) Recognized in Income
	2011			2010		2009
Fair value hedges:
Interest rate swaps (a)	$	—		$	—	$	4,097
Derivative instruments not designated as hedges:
Foreign exchange contracts (b)	$	(3,633	)	$	1,938	$	(8,574	)

	Cash Flow Hedges						Net Investment Hedges
	Interest Rate Swaps (c)			Foreign Exchange Contracts (d)			Cross-Currency Swaps (c)
2011
Effective portion:
Gain/(loss) recognized in OCI	$	(3,009	)	$	(711	)	$	—
Gain/(loss) reclassified into income	$	—		$	53		$	—
Ineffective portion:
Gain/(loss) recognized in income	$	—		$	—		$	—
2010
Effective portion:
Gain/(loss) recognized in OCI	$	—		$	73		$	52,158
Gain/(loss) reclassified into income	$	—		$	(108	)	$	—
Ineffective portion:
Gain/(loss) recognized in income	$	—		$	—		$	(91	)
2009
Effective portion:
Gain/(loss) recognized in OCI	$	1,853		$	(2,277	)	$	(7,988	)
Gain/(loss) reclassified into income	$	—		$	94		$	—
Ineffective portion:
Gain/(loss) recognized in income	$	—		$	—		$	536

(a) The amount of gain/(loss) recognized in income on derivatives is recorded in "Loss on prepayment of debt" in the company's consolidated statements of operations.

(b) The amount of gain/(loss) recognized in income on derivatives is recorded in "Cost of sales" in the company's consolidated statements of operations.

(c) Both the effective and ineffective portions of any gain/(loss) reclassified or recognized in income are recorded in "Interest and other financing expense, net" in the company's consolidated statements of operations.

(d) Both the effective and ineffective portions of any gain/(loss) reclassified or recognized in income are recorded in "Cost of sales" in the company's consolidated statements of operations.

Interest Rate Swaps

The company enters into interest rate swap transactions that convert certain fixed-rate debt to variable-rate debt or variable-rate debt to fixed-rate debt in order to manage its targeted mix of fixed- and floating-rate debt.  The effective portion of the change in the fair value of interest rate swaps designated as fair value hedges is recorded as a change to the carrying value of the related hedged debt, and the effective portion of the change in fair value of interest rate swaps designated as cash flow hedges is recorded in the shareholders' equity section in the company's consolidated balance sheets in "Other."  The ineffective portion of the interest rate swap, if any, is recorded in "Interest and other financing expense, net" in the company's consolidated statements of operations.

In June 2004 and November 2009, the company entered into interest rate swaps, with an aggregate notional amount of $275,000.  The swaps modified the company's interest rate exposure by effectively converting a portion of the fixed 6.875% senior notes to a floating rate, based on the six-month U.S. dollar LIBOR plus a spread (an effective rate of 4.37% at December 31, 2010), through its maturity.  The swaps were classified as fair value hedges and had a fair value of $14,756 at December 31, 2010. In September 2011, these interest rate swap agreements were terminated for proceeds of $12,203, net of accrued interest. The proceeds of the swap terminations, less accrued interest, were reflected as a premium to the underlying debt and will be amortized as a reduction to interest expense over the remaining term of the underlying debt.

In December 2010, the company entered into interest rate swaps, with an aggregate notional amount of $250,000. The swaps modified the company's interest rate exposure by effectively converting the fixed 3.375% notes to a floating rate, based on the three-month U.S. dollar LIBOR plus a spread (an effective rate of approximately 1.38% at December 31, 2010), through its maturity. The swaps are classified as fair value hedges and had a negative fair value of $674 at December 31, 2010. In September 2011, these interest rate swap agreements were terminated for proceeds of $11,856, net of accrued interest. The proceeds of the swap terminations, less accrued interest, were reflected as a premium to the underlying debt and will be amortized as a reduction to interest expense over the remaining term of the underlying debt.

In September 2011, the company entered into a ten-year forward-starting interest rate swap (the "2011 swap") locking in a treasury rate of 2.63% with an aggregate notional amount of $175,000. This swap manages the risk associated with changes in treasury rates and the impact of future interest payments. The 2011 swap relates to the interest payments for anticipated debt issuances. Such anticipated debt issuances are expected to replace the outstanding debt maturing in July 2013. The 2011 swap is classified as a cash flow hedge and had a negative fair value of $3,009 at December 31, 2011.

Cross-Currency Swaps

The company occasionally enters into cross-currency swaps to hedge a portion of its net investment in euro-denominated net assets. The company’s cross-currency swaps are derivatives designated as net investment hedges.  The effective portion of the change in the fair value of derivatives designated as net investment hedges is recorded in "Foreign currency translation adjustment" included in the company's consolidated balance sheets and any ineffective portion is recorded in "Interest and other financing expense, net" in the company's consolidated statements of operations.  As the notional amounts of the company’s cross-currency swaps are expected to equal a comparable amount of hedged net assets, no material ineffectiveness is expected.  The company uses the hypothetical derivative method to assess the effectiveness of its net investment hedges on a quarterly basis.

In May 2006, the company entered into a cross-currency swap, with a maturity date of July 2011, for approximately $100,000 or €78,281. In October 2005, the company entered into a cross-currency swap, with a maturity date of October 2010, for approximately $200,000 or €168,384. These cross-currency swaps hedged a portion of the company's net investment in euro-denominated net assets, by effectively converting the interest expense on $300,000 of long-term debt from U.S. dollars to euros. During 2010, the company paid $2,282, plus accrued interest, to terminate these cross-currency swaps.

Foreign Exchange Contracts

The company enters into foreign exchange forward, option, or swap contracts (collectively, the "foreign exchange contracts") to mitigate the impact of changes in foreign currency exchange rates.  These contracts are executed to facilitate the hedging of foreign currency exposures resulting from inventory purchases and sales and generally have terms of no more than six months. Gains or losses on these contracts are deferred and recognized when the underlying future purchase or sale is recognized or when the corresponding asset or liability is revalued. The company does not enter into foreign exchange contracts for trading purposes. The risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the company minimizes by limiting its counterparties to major financial institutions.  The fair value of the foreign exchange contracts, which are nominal, are estimated using market quotes.  The notional amount of the foreign exchange contracts at December 31, 2011 and 2010 was $332,881 and $297,868, respectively.

Other

The carrying amount of cash and cash equivalents, accounts receivable, net, and accounts payable approximate their fair value due to the short maturities of these financial instruments.

Cash equivalents consist primarily of overnight time deposits and institutional money market funds with quality financial institutions.  These financial institutions are located in many different geographical regions, and the company's policy is designed to limit exposure with any one institution.  As part of its cash and risk management processes, the company performs periodic evaluations of the relative credit standing of these financial institutions