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FAIR VALUE MEASUREMENT
 12 Months Ended
Dec. 31, 2011
FAIR VALUE MEASUREMENT  
FAIR VALUE MEASUREMENT

8. FAIR VALUE MEASUREMENT

        As of December 31, 2010 and 2011, information about inputs into the fair value measurements of the Company's assets or liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows:

 
   Fair Value Measurements at Reporting Date Using  
As of December 31, 2011
  Total Fair
Value and
Carrying
Value on the
Balance Sheet 		  Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) 		  Significant
Other
Observable
Inputs
(Level 2) 		  Significant
Unobservable
Inputs
(Level 3) 		 

Assets:

                          

Foreign exchange option contracts

   $ 479,333   $ —   $ 479,333   $ —  

Foreign exchange forward contracts

   $ 2,247,205   $ —   $ 2,247,205   $ —  
                   

Total Assets

   $ 2,726,538     —   $ 2,726,538     —  
                   

 
   Fair Value Measurements at Reporting Date Using  
As of December 31, 2010
  Total Fair
Value and
Carrying
Value on the
Balance Sheet 		  Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) 		  Significant
Other
Observable
Inputs
(Level 2) 		  Significant
Unobservable
Inputs
(Level 3) 		 

Assets:

                          

Foreign exchange forward contracts

   $ 2,182,677   $ —   $ 2,182,677   $ —  
                   

Total Assets

   $ 2,182,677     —   $ 2,182,677     —  
                   

Liabilities:

                          

Foreign exchange option contracts

   $ 1,062,179   $ —   $ 1,062,179   $ —  

Foreign exchange forward contracts

   $ 1,389,983   $ —   $ 1,389,983   $ —  
                   

Total Liabilities

   $ 2,452,162     —   $ 2,452,162     —  
                   

        The Company's foreign currency derivative instruments relate to foreign exchange option or forward contracts involving major currencies such as Euro and USD. Since its derivative instruments are not traded on an exchange, the Company values them using valuation models. Interest rate yield curves and foreign exchange rates are the significant inputs into these valuation models. These inputs are observable in active markets over the terms of the instruments the Company holds, and accordingly, the fair value measurements are classified as Level 2 in the hierarchy. The Company considers the effect of its own credit standing and that of its counterparties in valuations of its derivative financial instruments.

        The Company did not have any assets or liabilities measured at fair value on a non-recurring basis for the years ended December 31, 2010 and 2011.

        The Company also holds financial instruments that are not recorded at fair value in the consolidated balance sheets, but whose fair value is required to be disclosed under US GAAP. The carrying value of cash and cash equivalents, trade receivables, billed and unbilled, amount due from related parties, accounts and short-term notes payable, other payables, other current liabilities, amounts due to related parties, and short-term borrowings approximate their fair values due to the short-term maturity of these instruments. Long-term bank borrowings of $88,249,027 as of December 31, 2011 approximate their fair value since these borrowings contain variable interest rates.

        Depending on the terms of the specific derivative instruments and market conditions, some of the Company's derivative instruments may be assets and others liabilities at any particular point in time.

        The Company's primary objective for holding derivative financial instruments is to manage currency risk. The recognition of gains or losses resulting from changes in fair values of those derivative instruments is based on the use of each derivative instrument and whether it qualifies for hedge accounting.

        The Company entered into certain foreign currency derivative contracts to protect against volatility of future cash flows caused by the changes in foreign exchange rates. The foreign currency derivative contracts do not qualify for hedge accounting and, as a result, the changes in fair value of the foreign currency derivative contracts are recognized in the consolidated statements of operations. The Company recorded a gain (loss) on foreign currency derivative contracts of $9,870,333, $1,656,928 and $(5,750,981) for the years ended December 31, 2009, 2010 and 2011, respectively.

        The effect of fair values of derivative instruments on the consolidated balance sheets as of December 31, 2010 and 2011 and the effect of derivative instruments on consolidated statements of operations for the years ended December 31, 2010 and 2011 are as follows:

 
   Fair Values of Derivatives Asset  
 
   At December 31, 2010   At December 31, 2011  
 
   Balance Sheet Location   Fair Value   Balance Sheet Location   Fair Value  

Foreign exchange option contracts

   Foreign currency derivative assets   $ —   Foreign currency derivative assets   $ 479,333  

Foreign exchange forward contracts

   Foreign currency derivative assets   $ 2,182,677   Foreign currency derivative assets     2,247,205  
                   

Total derivatives

       $ 2,182,677       $ 2,726,538  
                   

 

 
   Fair Values of Derivatives Liability  
 
    
    
   At December 31, 2011  
 
   At December 31, 2010  
 
    
   Fair Value  
 
   Balance Sheet Location   Fair Value   Balance Sheet Location  

Foreign exchange option contracts

   Foreign currency derivative liabilities   $ 1,062,179   Foreign currency derivative liabilities   $ —  

Foreign exchange forward contracts

   Foreign currency derivative liabilities   $ 1,389,983   Foreign currency derivative liabilities   $ —  
                   

Total derivatives

       $ 2,452,162       $ —  
                   

 

 
    
   Amount of Gain (Loss) Recognized in
Income on Derivatives 		 
 
    
   Year Ended December 31  
 
   Location of
Gain (Loss) Recognized
in Income on Derivatives 		 
 
   2009   2010   2011  

Foreign exchange option contracts

   Gain on foreign currency derivatives   $ 4,783,240   $ 6,636,821   $ (6,933,353 )

Foreign exchange forward contracts

   Gain on foreign currency derivatives     5,087,093     (4,979,893 )   1,182,372  
                   

Total

       $ 9,870,333   $ 1,656,928   $ (5,750,981 )