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Risk Management and Derivatives
 3 Months Ended
Mar. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Risk Management and Derivatives
Risk Management and Derivatives
The Company's use of derivative financial instruments is primarily limited to the utilization of interest rate hedges and foreign exchange hedges. The principal objective of such hedges is to minimize the risks and/or costs associated with the Company's operating and financial structure and to manage its exposure to foreign exchange rates. Derivatives not designated as hedges are not speculative and are used to manage the Company's exposure to interest rate movements, foreign exchange rate movements, and other identified risks, but may not meet the strict hedge accounting requirements.
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012 ($ in thousands):
 
Derivative Assets as of
 
Derivative Liabilities as of
 
March 31, 2013
 
December 31, 2012
 
March 31, 2013
 
December 31, 2012
Derivative
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Foreign exchange contracts
Other Assets
 
$
10,522

 
N/A
 
$
—

 
N/A
 
$
—

 
Other Liabilities
 
$
2,855

Cash flow interest rate swap
N/A
 
—

 
N/A
 
—

 
Other Liabilities
 
455

 
Other Liabilities
 
580

Total
 
 
$
10,522

 
 
 
$
—

 
 
 
$
455

 
 
 
$
3,435


The tables below present the effect of the Company's derivative financial instruments on the Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012 ($ in thousands):
Derivatives Designated in Hedging Relationships
 
Location of Gain (Loss)
Recognized in
Income on Derivative
 
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion)
 
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings (Effective Portion)
 
Amount of Gain (Loss) Recognized in Earnings (Ineffective Portion)
For the Three Months Ended March 31, 2013
 
 
 
 

 
 

 
 
Cash flow interest rate swap
 
Interest Expense
 
$
37

 
$
74

 
N/A
For the Three Months Ended March 31, 2012
 
 
 
 

 
 

 
 
Cash flow interest rate swap
 
Interest Expense
 
$
(205
)
 
$
(5
)
 
N/A
 
 
 
 
Amount of Gain or (Loss)
Recognized in Income on Derivative
 
 
Location of Gain or
(Loss) Recognized in
Income on Derivative
 
For the Three Months Ended March 31,
Derivatives not Designated in Hedging Relationships
 
2013
 
2012
Foreign Exchange Contracts
 
Other Expense
 
$
10,156

 
$
(8,859
)

The Company utilizes foreign exchange derivatives to limit its exposure to changes in exchange rates on certain assets denominated in foreign currencies. The Company marks its foreign investments to market each quarter based on current exchange rates and records the gain or loss through “Other expense” on its Consolidated Statements of Operations for loan investments or “Accumulated comprehensive income,” on its Consolidated Balance Sheets for net investments in foreign subsidiaries. Gains or losses on the related foreign exchange derivatives are recorded in “Other Expense,” as noted in the table above, and offset the marks taken on the assets. During the three months ended March 31, 2013 and 2012, the Company recorded net losses related to foreign investments of $0.1 million and $0.1 million, respectively, in its Consolidated Statements of Operations.
The following table presents the Company's foreign currency derivatives outstanding as of March 31, 2013 ($ in thousands):
Derivative Type
 
Notional
Amount
 
Notional
(USD Equivalent)
 
Maturity
Sells EUR/Buys USD Forward
 
€
84,400

 
$
108,222

 
April 2013
Sells GBP/Buys USD Forward
 
£
27,900

 
$
42,396

 
April 2013
Sells CAD/Buys USD Forward
 
C$
48,700

 
$
47,866

 
April 2013

Qualifying Cash Flow Hedges—In October 2012, the Company entered into an interest rate swap to convert its variable rate debt to fixed rate on a new $28.0 million secured term loan maturing in 2019. The following table presents the Company's interest rate swap outstanding as of March 31, 2013 ($ in thousands).
Derivative Type
 
Notional
Amount
 
Variable Rate
 
Fixed Rate
 
Maturity
Interest Rate Swap
 
$
28,000

 
LIBOR + 2.00%
 
3.75%
 
November 2019

Over the next 12 months, the Company expects that $0.9 million will be reclassified to interest expense from the existing swap and $0.6 million will be reclassified to income related to terminated cash flow hedges from "Accumulated other comprehensive income (loss)" into earnings.
Credit risk-related contingent features—The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
In connection with its foreign currency derivatives, as of March 31, 2013 and December 31, 2012, the Company has posted collateral of $9.6 million, which is included in "Restricted cash" on the Company's Consolidated Balance Sheets.