Derivative Instruments

12 Months Ended

Dec. 31, 2011

Derivative Instruments [Abstract]

Derivative Instruments

15. Derivative Instruments

The Company's corporate and foreign subsidiaries use foreign currency forward exchange contracts and foreign exchange option contracts to limit the exposure of exchange rate fluctuations on certain foreign currency receivables, payables, and other known and forecasted transactional exposures for periods consistent with the expected cash flow of the underlying transactions. The foreign currency forward exchange and foreign exchange option contracts generally mature within eighteen months and are designed to limit exposure to exchange rate fluctuations. The Company also uses cash flow hedges to limit the exposure to changes in natural gas prices. The natural gas forward contracts generally mature within one to eighteen months. The Company accounts for its derivative instruments under ASC 815 "Derivatives and Hedging."

The fair value of outstanding derivative contracts recorded as assets in the accompanying consolidated balance sheets were as follows:

Asset Derivatives

		December 31,
(Dollars in thousands)	Balance Sheet Locations	2011		2010
Derivatives designated as hedging instruments under ASC 815:
Foreign exchange contracts	Other current assets	$	694	$	321
Natural gas contracts	Other current assets		—		2
Foreign exchange contracts	Other assets		94		—
Currency swap	Other assets		—		37
Natural gas contracts	Other assets		—		6
Total derivatives designated as hedging instruments under ASC 815			788		366
Derivatives not designated as hedging instruments under ASC 815:
Foreign exchange contracts	Other current assets		15		34
Total asset derivatives		$	803	$	400

The fair value of outstanding derivative contracts recorded as liabilities in the accompanying consolidated balance sheets were as follows:

Liability Derivatives

		December 31,
(Dollars in thousands)	Balance Sheet Locations	2011		2010
Derivatives designated as hedging instruments under ASC 815:
Foreign exchange contracts	Accounts payable and accrued liabilities	$	309	$	243
Natural gas contracts	Accounts payable and accrued liabilities		1,286		1,608
Foreign exchange contracts	Accrued pension and other liabilities		26		34
Natural gas contracts	Accrued pension and other liabilities		209		509
Total derivatives designated as hedging instruments under ASC 815			1,830		2,394
Derivatives not designated as hedging instruments under ASC 815:
Foreign exchange contracts	Accounts payable and accrued liabilities		140		59
Total liability derivatives		$	1,970	$	2,453

In accordance with ASC 820, "Fair Value Measurements and Disclosures," the fair value of the Company's foreign exchange forward contracts, foreign exchange option contracts, currency swap, and natural gas forward contracts is determined using Level 2 inputs, which are defined as observable inputs. The inputs used are from market sources that aggregate data based upon market transactions.

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (OCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings and were not material for the years ended December 31, 2011 and 2010, respectively.

The following table provides details on the changes in accumulated OCI relating to derivative assets and liabilities that qualified for cash flow hedge accounting.

	December 31
(Dollars in thousands)	2011			2010
Accumulated OCI derivative loss at January 1	$	2,526		$	3,195
Effective portion of changes in fair value		1,269			826
Reclassifications from accumulated OCI derivative gain to earnings		(2,361	)		(1,322	)
Foreign currency translation		(75	)		(173	)
Accumulated OCI derivative loss at December 31	$	1,359		$	2,526

Derivatives in ASC 815 Cash Flow Hedging Relationships

	Amount of (Gain) or Loss Recognized in OCI on Derivatives (Effective Portion) December 31,
(Dollars in thousands)	2011		2010			2009
Foreign Exchange Contracts	$	22	$	(994	)	$	1,261
Currency Swap		—		—			(506	)
Natural Gas Contracts		1,247		1,820			2,414
Total	$	1,269	$	826		$	3,169

Derivatives in ASC 815 Cash Flow Hedging Relationships

	Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Reclassified from Accumulated OCI in Income (Effective Portion) December 31,
(Dollars in thousands)		2011			2010			2009
Foreign Exchange Contracts	Cost of products sold	$	(290	)	$	465		$	1,038
Currency Swap	Interest expense		—			(121	)		(35	)
Natural Gas Contracts	Cost of products sold		(2,071	)		(1,666	)		(2,132	)
Total		$	(2,361	)	$	(1,322	)	$	(1,129	)

Derivatives in ASC 815 Cash Flow Hedging Relationships

	Location of Loss Recognized in Income on Derivatives	Amount of Loss Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) December 31,
(Dollars in thousands)		2011			2010			2009
Foreign Exchange Contracts	Other expense – net	$	(75	)	$	(6	)	$	(20	)
Total		$	(75	)	$	(6	)	$	(20	)

Assuming market rates remain constant with the rates at December 31, 2011, a loss of $0.9 million is expected to be recognized in earnings over the next 12 months.

The Company had the following outstanding derivative contracts that were entered into to hedge forecasted transactions:

	December 31,
(in thousands except for mmbtu)	2011		2010		2009
Natural gas contracts (mmbtu)		700,000		985,000		1,070,000
Foreign exchange contracts	$	35,304	$	20,727	$	14,552
Currency swap	$	—	$	—	$	3,646

Other

The Company has also entered into certain derivatives to minimize its exposure of exchange rate fluctuations on certain foreign currency receivables, payables, and other known and forecasted transactional exposures. The Company has not qualified these contracts for hedge accounting treatment and therefore, the fair value gains and losses on these contracts are recorded in earnings as follows:

Derivatives Not Designated as Hedging Instruments Under ASC 815

	Location of Loss Recognized in Income on Derivatives	Amount of Loss Recognized in Income on Derivatives December 31,
(Dollars in thousands)		2011			2010			2009
Foreign Exchange Contracts *	Other expense – net	$	(189	)	$	(234	)	$	(294	)
Total		$	(189	)	$	(234	)	$	(294	)

* As of December 31, 2011, 2010 and 2009, these foreign exchange contracts were entered into and settled during the respective periods.

Management's policy for managing foreign currency risk is to use derivatives to hedge up to 75% of the forecasted intercompany sales to its European, Canadian, and Japanese subsidiaries. The hedges involving foreign currency derivative instruments do not span a period greater than eighteen months from the contract inception date. Management uses various hedging instruments including, but not limited to foreign currency forward contracts, foreign currency option contracts and foreign currency swaps. Management's policy for managing natural gas exposure is to use derivatives to hedge from zero to 75% of the forecasted natural gas requirements. These cash flow hedges currently span up to eighteen months from the contract inception date. Hedge effectiveness is measured on a quarterly basis and any portion of ineffectiveness is recorded directly to the Company's earnings.