Fair Value and Derivative Financial Instruments:

The Company holds certain assets and liabilities that are required to be measured at fair value on a recurring basis. These include the Company's derivative instruments related to foreign currency forward contracts, as well as foreign exchange swaps. The Company uses derivative financial instruments to manage risk and not for trading or other speculative purposes.

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is the Company's policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. The fair values of the Company's derivatives are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized these contracts as Level 2 in the fair value hierarchy.

The following table shows the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis:



	Balance Sheet Classification	December 31,
	Balance Sheet Classification	2012		2011
Assets:
Forward contracts (designated as hedging instruments)	Other current assets	$	1,210	$	—
Foreign exchange swaps (not designated as hedging instruments)	Other current assets	—		494
Forward contracts (designated as hedging instruments)	Other assets	418		—
Total assets		$	1,628	$	494
Liabilities:
Forward contracts (designated as hedging instruments)	Other accrued liabilities	$	196	$	3,809
Foreign exchange swaps (not designated as hedging instruments)	Other accrued liabilities	297		—
Forward contracts (designated as hedging instruments)	Other liabilities	—		129
Total liabilities		$	493	$	3,938

The Company enters into forward contracts to hedge the value of the U.S. dollar or euro cash flow at locations that do not have the U.S. dollar or euro as their functional currency but conduct certain transactions in U.S. dollars or euros. The objective of all outstanding forward contracts is to hedge forecasted transactions in U.S. dollars or euros through the cash settlement date. The Company enters into forward contracts with maturity dates of up to eighteen months after the contract date. All forward contracts are designated as and qualify for hedge accounting treatment.

The Company had foreign currency forward contracts outstanding in notional amounts as follows:



	December 31,
	2012	2011
U.S. dollar	52,020	50,550
Euro	19,500	8,250

Changes in the fair value of forward contracts designated as hedging instruments are recognized as a component of net income or accumulated other comprehensive income depending on whether the transaction related to the hedged risk has occurred and whether the contract qualifies as highly effective. Changes in fair values of derivatives that are accounted for as cash flow hedges are recorded in accumulated other comprehensive income. The amount of gain, net of tax, recorded as a component of accumulated other comprehensive income related to forward contracts was $978 at December 31, 2012 compared to a loss of $2,721 at December 31, 2011. At December 31, 2012 the Company expects to reclassify $633 of gain, net of tax, on forward contracts from accumulated other comprehensive income to net income during the next twelve months due to the actual fulfillment of forecasted transactions.

The following table summarizes the amount of gain (loss) reclassified from accumulated other comprehensive income into the consolidated statements of operations for 2012, 2011, and 2010:



	Years Ended December 31,
Statements of Operations Classification	2012			2011			2010
Net Sales	$	(3,394	)	$	538		$	(824	)
Other, net	157			(536		)	(269		)
	$	(3,237	)	$	2		$	(1,093	)

The Company formally assesses at a hedge's inception, and on an ongoing basis, whether the derivatives that are used in the hedging transaction have been highly effective in offsetting changes in the cash flows of the hedged items and whether those derivatives are expected to remain highly effective. When it is determined that a derivative has ceased to be highly effective as a hedge the Company discontinues hedge accounting prospectively. When the Company discontinues hedge accounting because it is no longer probable that the forecasted transaction will occur by the end of the originally expected period, but it is probable that the transaction will occur within the two months following the forecasted period, the gain or loss on the derivative remains in accumulated other comprehensive income and is reclassified to net earnings when the forecasted transaction affects net earnings. However, if it is probable that a forecasted transaction will not occur within two months after the forecasted period, the gains and losses that were accumulated in other comprehensive income will be recognized immediately in net earnings. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company carries the derivative at its fair value on the consolidated balance sheets, recognizing future changes in the fair value in other income or expense, net. All forward contracts qualified for hedge accounting in 2012, 2011, and 2010.

In addition, any portion of the hedge that is deemed ineffective due to the absolute value of the cumulative change in the derivative being greater than the cumulative change in the hedged item is recorded immediately in other income (expense) on the consolidated statements of operations. There was no significant hedge ineffectiveness in 2012, 2011 or 2010.

The Company uses foreign exchange swaps to hedge intercompany financing activities between group companies with different functional currencies. The Company does not designate these foreign exchange swaps as hedging instruments. Accordingly, the gain or loss associated with changes in the fair value of these contracts is immediately recorded in other, net on the consolidated statements of operations.

The following table summarizes the amount of gain (loss) related to foreign exchange swaps recognized in the statements of operations for 2012, 2011, and 2010:



	Years Ended December 31,
Statement of Operations Classification	2012			2011		2010
Other, net	$	(782	)	$	517	$	14