Derivative Financial Instruments

3 Months Ended

Mar. 31, 2013

Summary of Derivative Instruments [Abstract]

Derivative Financial Instruments

10. DERIVATIVE FINANCIAL INSTRUMENTS

Derivatives Designated as Hedging Instruments

As of March 31, 2013, the Company’s derivative assets and liabilities primarily resulted from cash flow hedges related to its forecasted operating expenses transacted in local currencies. A substantial portion of the Company’s overseas expenses are and will continue to be transacted in local currencies. To protect against fluctuations in operating expenses and the volatility of future cash flows caused by changes in currency exchange rates, the Company has established a program that uses foreign exchange forward contracts to hedge its exposure to these potential changes. The terms of these instruments, and the hedged transactions to which they relate, generally do not exceed 12 months.

Generally, when the dollar is weak, foreign currency denominated expenses will be higher, and these higher expenses will be partially offset by the gains realized from the Company’s hedging contracts. Conversely, if the dollar is strong, foreign currency denominated expenses will be lower. These lower expenses will in turn be partially offset by the losses incurred from the Company’s hedging contracts. The change in the derivative component in Accumulated other comprehensive loss includes unrealized gains or losses that arose from changes in market value of the effective portion of derivatives that were held during the period, and gains or losses that were previously unrealized but have been recognized in the same line item as the forecasted transaction in current period net income due to termination or maturities of derivative contracts. This reclassification has no effect on total comprehensive income or equity.

The total cumulative unrealized loss on cash flow derivative instruments was $2.9 million and nil at March 31, 2013 and December 31, 2012, respectively, and is included in Accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets. See Note 11 for more information related to comprehensive income. The net unrealized loss as of March 31, 2013 is expected to be recognized in income over the next 12 months at the same time the hedged items are recognized in income.

Derivatives not Designated as Hedges

A substantial portion of the Company’s overseas assets and liabilities are and will continue to be denominated in local currencies. To protect against fluctuations in earnings caused by changes in currency exchange rates when remeasuring the Company’s balance sheet, it utilizes foreign exchange forward contracts to hedge its exposure to this potential volatility.

These contracts are not designated for hedge accounting treatment under the authoritative guidance. Accordingly, changes in the fair value of these contracts are recorded in Other (expense) income, net.

Fair Values of Derivative Instruments

	Asset Derivatives				Liability Derivatives
	(In thousands)
	March 31, 2013		December 31, 2012		March 31, 2013		December 31, 2012
Derivatives Designated as Hedging Instruments	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value
Foreign currency forward contracts	Prepaid expenses and other current assets	$2,601	Prepaid expenses and other current assets	$4,157	Accrued expenses and other current liabilities	$5,697	Accrued expenses and other current liabilities	$4,162
	Asset Derivatives				Liability Derivatives
	(In thousands)
	March 31, 2013		December 31, 2012		March 31, 2013		December 31, 2012
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value
Foreign currency forward contracts	Prepaid expenses and other current assets	$114	Prepaid expenses and other current assets	$448	Accrued expenses and other current liabilities	$135	Accrued expenses and other current liabilities	$52

The Effect of Derivative Instruments on Financial Performance

	For the Three Months Ended March 31,
	(In thousands)
Derivatives in Cash Flow Hedging Relationships	Amount of (Loss) Gain Recognized in Other Comprehensive Income (Effective Portion)					Location of Loss  Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Loss  Reclassified from Accumulated Other  Comprehensive Loss (Effective Portion)
	2013			2012			2013			2012
Foreign currency forward contracts	$	(2,925	)	$	3,561	Operating expenses	$	(524	)	$	(1,527	)

There was no material ineffectiveness in the Company’s foreign currency hedging program in the periods presented.

	For the Three Months Ended March 31,
	(In thousands)
Derivatives Not Designated as Hedging Instruments	Location of Loss Recognized in Income on Derivative	Amount of Loss Recognized in Income on Derivative
		2013			2012
Foreign currency forward contracts	Other (expense) income, net	$	(456	)	$	(176	)

Outstanding Foreign Currency Forward Contracts

As of March 31, 2013, the Company had the following net notional foreign currency forward contracts outstanding (in thousands):

Foreign Currency	Currency Denomination
Australian Dollar	AUD 8,258
Pounds Sterling	GBP 35,800
Canadian Dollar	CAD 5,673
Chinese Yuan Renminbi	CNY 77,776
Danish Krone	DKK 1,900
Euro	EUR 34,293
Hong Kong Dollar	HKD 53,440
Indian Rupee	INR 1,089,210
Japanese Yen	JPY 440,658
New Zealand Dollar	NZD 900
Singapore Dollar	SGD 9,676
Swiss Franc	CHF 24,399