Derivative Instruments

3 Months Ended

Mar. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Foreign Currency Forward Contracts - Hedging Instruments

Due to the global nature of our operations, portions of our revenues are earned in currencies other than the U.S. dollar. The value of revenues measured in U.S. dollars is therefore subject to changes in foreign currency exchange rates. In order to mitigate these changes we use foreign currency forward contracts to lock in exchange rates associated with a portion of our forecasted international revenues.

Foreign currency forward contracts in effect as of March 31, 2013 and December 31, 2012 had durations of 1 to 12 months. These contracts have been designated as cash flow hedges and accordingly, to the extent effective, any unrealized gains or losses on these foreign currency forward contracts are reported in accumulated other comprehensive income (loss). Realized gains and losses for the effective portion of such contracts are recognized in revenue when the sale of product in the currency being hedged is recognized. To the extent ineffective, hedge transaction gains and losses are reported in other income (expense), net.

The notional value of foreign currency forward contracts that were entered into to hedge forecasted revenues is summarized as follows:

	Notional Amount
Foreign Currency: (in millions)	As of March 31, 2013		As of December 31, 2012
Euro	$	456.7	$	492.2
Canadian dollar	26.6		31.8
Total foreign currency forward contracts	$	483.3	$	524.0

The portion of the fair value of these foreign currency forward contracts that was included in accumulated other comprehensive income (loss) within total equity reflected gains of $1.2 million and losses of $11.8 million as of March 31, 2013 and December 31, 2012, respectively. We expect all contracts to be settled over the next 12 months and any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to revenue. We consider the impact of our and our counterparties’ credit risk on the fair value of the contracts as well as the ability of each party to execute its contractual obligations. As of March 31, 2013 and December 31, 2012, respectively, credit risk did not materially change the fair value of our foreign currency forward contracts.

The following table summarizes the effect of derivatives designated as hedging instruments on our condensed consolidated statements of income:

	As of March 31,				For the Three Months Ended March 31,
	Gains/(Losses) Recognized in AOCI (Effective Portion)				Gains/(Losses) Reclassified from AOCI into Net Income (Effective Portion)					Gains/(Losses) Recognized into Net Income (Ineffective Portion)
(In millions)	2013		2012		Location	2013		2012		Location	2013		2012
Hedging instruments	$	1.2	$	16.0	Revenue	$	1.1	$	5.4	Other income (expense)	$	0.2	$	1.9

We recognized in product revenue net gains of $1.1 million and $5.4 million for the settlement of certain effective cash flow hedge instruments for the three months ended March 31, 2013 and 2012, respectively. These settlements were recorded in the same period as the related revenues were generated.

In relation to our foreign currency forward contracts, due to hedge ineffectiveness, we recognized in other income (expense) net gains of $0.2 million and $1.9 million for the three months ended March 31, 2013 and 2012, respectively.

Foreign Currency Forward Contracts - Other Derivatives

We also enter into other foreign currency forward contracts, usually with one month durations, to mitigate the foreign currency risk related to certain balance sheet positions. We have not elected hedge accounting for these transactions.

The aggregate notional amount of these other outstanding foreign currency contracts was $138.6 million and $243.2 million as of March 31, 2013 and December 31, 2012, respectively. A net gain of $0.9 million related to these contracts was recognized as a component of other income (expense), net, for the three months ended March 31, 2013, respectively, as compared to a net loss of $4.3 million in the prior year comparative period.

Summary of Derivatives

While certain of our derivatives are subject to netting arrangements with our counterparties, we do not offset derivative assets and liabilities within our condensed consolidated balance sheets.

The following table summarizes the fair value and presentation in our condensed consolidated balance sheets for our outstanding derivatives including those designated as hedging instruments:

(In millions)	Balance Sheet Location	Fair Value As of March 31, 2013
Hedging Instruments:
Asset derivatives	Other current assets	$	5.1
Liability derivatives	Accrued expenses and other	$	2.7
Other Derivatives:
Asset derivatives	Other current assets	$	1.9
Liability derivatives	Accrued expenses and other	$	0.5
(In millions)	Balance Sheet Location	Fair Value As of December 31, 2012
Hedging Instruments:
Asset derivatives	Other current assets	$	0.6
Liability derivatives	Accrued expenses and other	$	11.5
Other Derivatives:
Asset derivatives	Other current assets	$	1.2
Liability derivatives	Accrued expenses and other	$	2.9