Risk Management - Risk Concentrations and Interest Rate Risk

12 Months Ended

Dec. 31, 2012

Risk Management - Risk Concentrations and Interest Rate Risk

Risk Management - Risk Concentrations and Interest Rate Risk

(9) Risk Management — Risk Concentrations and Interest Rate Risk

Risk Concentrations

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash deposits, lease receivables and interest rate swaps.

We place our cash deposits with financial institutions and other creditworthy institutions such as money market funds and limit the amount of credit exposure to any one party. We opt for security of principal as opposed to yield. In late 2008, we moved substantial deposits to U.S. treasury securities to avoid risk of loss. Concentrations of credit risk with respect to lease receivables are limited due to the large number of customers comprising our customer base, and their dispersion across different geographic areas. Some lessees are required to make payments for maintenance reserves at the end of the lease however, risk is considered limited due to the relatively few lessees which have this provision in the lease.  We enter into interest rate swap agreements with counterparties that are investment grade financial institutions.

Interest Rate Risk Management

To mitigate exposure to interest rate changes, we have entered into interest rate swap agreements. As of December 31, 2012, one swap agreement had a notional outstanding amount of $100.0 million, a remaining term of eleven months at a fixed rate of 2.10%. In 2012, 2011 and 2010, $6.4 million, $11.3 million and $18.6 million was realized through the income statement as an increase in interest expense, respectively.