HEDGING ACTIVITIES

3 Months Ended

Mar. 31, 2013

HEDGING ACTIVITIES

6. HEDGING ACTIVITIES

Periodically, we have entered into interest rate swaps to hedge the cash flows from our variable rate debt, which effectively converts the hedged portion under our outstanding senior secured term loan facility to fixed rate debt. The initial assessments of hedge effectiveness were performed using regression analysis. The periodic measurements of hedge ineffectiveness are performed using the change in variable cash flows method.

The cash flow hedges are recorded at fair value with a corresponding entry, net of taxes, recorded in other comprehensive income (“OCI”) until earnings are affected by the hedged item. At March 31, 2013, the notional amount of debt outstanding under interest rate swap agreements was $500.0 million. These swap agreements mature on June 3, 2013. The fixed interest rate on the interest rate swaps ranges from 1.685% to 1.6975%. During the three months ended March 31, 2012, three interest rate swaps with a notional value of $500.0 million matured. The interest rate on these three interest rate swaps ranged from 2.56% to 2.60%.

The following table presents, in thousands, the fair value of the Company’s derivatives and consolidated balance sheet location.

	Liability Derivatives
	March 31, 2013			December 31, 2012
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate swaps	Accrued expenses	$	695	Accrued expenses	$	2,346
Total derivatives		$	695		$	2,346

The following presents, in thousands the impact of interest rate swaps on the consolidated statement of operations for the three months ended March 31, 2013 and 2012, respectively.

						Amount of gain (loss)
	Amount of gain (loss)					reclassified from OCI
	recognized in OCI				Location of gain	into earnings for
Derivatives designated	for the three months				reclassified from OCI	the three months
as hedging instruments	ended March 31,				into earnings	ended March 31,
	2013		2012			2013		2012
Interest rate swaps	$	1,024	$	437	Interest expense	$	1,736	$	—