Foreign Currency Exchange Risk Management

12 Months Ended

Dec. 31, 2012

Foreign Currency Exchange Risk Management

Foreign Currency Exchange Risk Management

12. Foreign Currency Exchange Risk Management

        Prior to December 2012, we used Euro-denominated debt as a non-derivative financial instrument to partially offset the Company's business exposure to foreign currency exchange risk attributable to our net investments in Europe. Our focus was to manage the foreign currency exchange risks associated with our European subsidiaries. To help protect the Company's net investment in certain of its European subsidiary operations from adverse changes in foreign currency exchange rates, management denominated a portion of the Euro-denominated debt in the same functional currency used by the European subsidiaries. In December 2012, the Company paid off its remaining balance in the Euro-denominated debt. At December 31, 2011, the Company carried $13.2 million in Euro-denominated debt and designated the debt as a non-derivative hedge of its net investment in certain European subsidiaries. The Company designated the hedging relationship such that changes in the net investments being hedged were expected to be naturally offset by corresponding changes in the value of the Euro-denominated debt.

        The effective portion of the net foreign investment hedge was reported in accumulated other comprehensive income (loss) ("AOCI") as part of the cumulative translation adjustment. Any ineffective portion of the net foreign investment hedge was recognized in earnings as other income (expense) during the period of change. Effectiveness of the hedging relationship was measured and designated at the beginning of each month by comparing the outstanding balance of the Euro-denominated debt to the carrying value of the designated net equity investments.

        At December 31, 2012 and 2011, the carrying value and line item caption of the Company's non-derivative instrument was reported on the consolidated balance sheet as follows (in thousands):

		Carrying Value at:
Non-Derivative Instrument in Net Investment Hedging Relationship	Balance Sheet Location	December 31, 2012		December 31, 2011
Euro-denominated debt	Notes payable to banks	$	—	$	13,240

        The effect of the non-derivative instrument qualifying and designated as a hedging instrument in net foreign investment hedges on the consolidated financial statements for the years ended December 31, 2012 and 2011 was as follows (in thousands):

	Amount of Gain (Loss) Recognized in AOCI (Effective Portion)						Amount of Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Year Ended December 31,						Year Ended December 31,
						Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
Non-Derivative Instrument in Net Investment Hedging Relationship
	2012			2011			2012		2011
Euro-denominated debt	$	(256	)	$	251	Other income (expense)	$	—	$	—