DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS

The Company periodically enters into foreign currency exchange contracts designed to mitigate the impact of foreign currency risk.  Prior to November 2012, the Company had not instituted a formal foreign exchange policy.  All contracts entered into prior to this date are accounted for as undesignated hedges and, therefore changes in fair value are recognized each period in other income (expense) in our consolidated statements of income.  The fair value of the contracts is presented in accounts receivable in our consolidated balance sheets.  At December 31, 2011, the Company had foreign exchange contracts with notional values of $600 that matured in April 2012.  At December 31, 2012, the Company also had undesignated foreign currency hedge contracts with notional amounts of $6,600 which were directly offset by corresponding foreign currency contracts.  These contracts expire over a period from September to November 2013.  A gain of $4 and $43 was recognized for 2012 and 2011, respectively.

In November 2012, the Company adopted a formal foreign currency exchange policy.  Under this policy, for those foreign currency exchange contracts that qualify for hedge accounting treatment, changes in the fair value of such instruments are included in accumulated other comprehensive income (loss). The Company also assesses, both at inception and on an ongoing basis, whether the derivatives that are used in the hedging transaction are highly effective in offsetting changes in cash flows of the hedged items.  For those foreign currency exchange contracts that do not qualify for hedge accounting treatment, changes in the fair value of such instruments are recognized each period in other income (expense) in our consolidated statements of income. In December 2012, the Company entered into foreign exchange currency contracts with notional values of $12,950 maturing from September 2013 to October 2014 that were considered cash flow hedges.  Changes in fair value of such cash flow hedges are recorded in accumulated other comprehensive income (loss) to the extent that the hedges are considered effective.  At December 31, 2012, the change in fair value was minimal.

The following table presents the financial instruments measured at fair value on a recurring basis:

	December 31, 2012
	Level 1		Level 2		Level 3		Total
Current Assets
Derivative financial instruments
Foreign currency contracts	$	--	$	326	$	--	$	326
Total assets	$	--	$	326	$	--	$	326
Current Liabilities
Derivative financial instruments
Foreign currency contracts	$	--	$	326	$	--	$	326
Total liabilities	$	--	$	326	$	--	$	326

	December 31, 2011
	Level 1		Level 2		Level 3		Total
Current Assets
Derivative financial instruments
Foreign currency contracts	$	--	$	43	$	--	$	43
Total assets	$	--	$	43	$	--	$	43
Current Liabilities
Derivative financial instruments
Foreign currency contracts	$	--	$	--	$	--	$	--
Total liabilities	$	--	$	--	$	--	$	--