Forward Exchange Contracts

9 Months Ended

Sep. 30, 2012

Forward Exchange Contracts [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

(8)  Forward Exchange Contracts

Orbital occasionally uses forward exchange contracts to manage certain foreign currency exposures.  Forward exchange contracts are viewed as risk management tools by the company and are not used for trading or speculative purposes.  Each forward exchange contract used for hedging purposes is designated as a hedge of the identified risk exposure at the inception of the contract.  Changes in the fair value of each forward exchange contract are expected to be highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.  Forward exchange contracts are recorded on the balance sheet at fair value.  The ineffective portion of all hedges, if any, is recognized currently in earnings.

In 2012, Orbital entered into a series of forward exchange contracts to sell euros and purchase U.S. dollars in order to hedge the company’s exposure to fluctuating foreign exchange rates in connection with a customer contract denominated in euros.  As of September 30, 2012, the company had 10 forward exchange contracts with a total contract value of 56.0 million euros, or $72.7 million, that have various expiration dates through January 2015.  As of September 30, 2012, the fair market value of these forward exchange contracts was not significant.