Derivative Instruments

6 Months Ended

Jun. 30, 2011

Derivative Instruments [Abstract]

Derivative Instruments

10.   Derivative Instruments

Foreign Currency Forward Contracts

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 subject to changes in 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 June 30, 2011 and December 31, 2010 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 revenue is summarized as follows:

	Notional Amount
	As of		As of
	June 30,		December 31,
Foreign Currency (In millions)	2011		2010
Euro	$	537.1	$	460.3
Canadian dollar		11.4		24.0
Swedish krona		4.8		9.9
Total foreign currency forward contracts	$	553.3	$	494.2

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 net losses of $23.3 million and $11.0 million as of June 30, 2011 and December 31, 2010, 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 obligations under the contract. As of June 30, 2011 and December 31, 2010, credit risk did not materially change the fair value of our foreign currency forward contracts.

In relation to our foreign currency forward contracts, we recognized in other income (expense), net losses of $1.2 million and $0.5 million due to hedge ineffectiveness for the three and six months ended June 30, 2011, respectively, as compared to net losses of $0.6 million and $0.5 million, respectively, in the prior year comparable periods.

In addition, we recognized in product revenue net losses of $18.5 million and $26.8 million for the settlement of certain effective cash flow hedge instruments for the three and six months ended June 30, 2011, respectively, as compared to net gains of $19.7 million and $19.9 million, respectively, in the prior year comparable periods. These settlements were recorded in the same period as the related forecasted revenue.

Summary of Derivatives Designated as Hedging Instruments

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

		Fair Value
		As of June 30,
(In millions)	Balance Sheet Location	2011
Foreign Currency Contracts
Asset derivatives	Other current assets	$	—
Liability derivatives	Accrued expenses and other	$	23.8

		Fair Value
		As of December 31,
(In millions)	Balance Sheet Location	2010
Foreign Currency Contracts
Asset derivatives	Other current assets	$	—
Liability derivatives	Accrued expenses and other	$	11.0

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

	Amount				Amount
	Recognized in				Reclassified from
	Accumulated				Accumulated
	Other				Other
	Comprehensive				Comprehensive
	Income (Loss)			Income	Income (Loss)			Income	Amount of
	on Derivative			Statement	into Income			Statement	Gain/(Loss)
	Gain/(Loss)			Location	Gain/(Loss)			Location	Recorded
(In millions)	(Effective Portion)			(Effective Portion)	(Effective Portion)			(Ineffective Portion)	(Ineffective Portion)
For the Three Months Ended
June 30, 2011:								Other income
Foreign currency contracts	$	(23.3	)	Revenue	$	(18.5	)	(expense)	$	(1.2	)
June 30, 2010:								Other income
Foreign currency contracts	$	62.1		Revenue	$	19.7		(expense)	$	(0.6	)
For the Six Months Ended
June 30, 2011:								Other income
Foreign currency contracts	$	(23.3	)	Revenue	$	(26.8	)	(expense)	$	(0.5	)
June 30, 2010:								Other income
Foreign currency contracts	$	62.1		Revenue	$	19.9		(expense)	$	(0.5	)

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 our outstanding foreign currency contracts was $243.2 million as of June 30, 2011. The fair value of these contracts was a net liability of $0.7 million. A net gain of $0.6 million and a net loss of $4.3 million related to these contracts were recognized as a component of other income (expense), net, for the three and six months ended June 30, 2011, respectively, as compared to net gains of $7.9 million and $13.1 million in the prior year comparative periods.