Financial Instruments

6 Months Ended

Jun. 30, 2011

Financial Instruments

7.  Financial Instruments

The Company is exposed to various market risks, including changes in interest rates and foreign exchange rates.  In order to partially mitigate the economic impact of these risks, derivative contracts are used as described below. The Company does not enter into such financial instruments for trading or speculative purposes. See related fair value disclosures in Footnote 9, Fair Value.

Interest Rate Swap Agreements

In August 2010, the Company entered into an interest rate swap on $55 million of its variable rate term loans. The swap converts interest payments from the variable rate 1-month LIBOR plus 4.5 percent rate to a fixed rate of 0.0074 percent plus 4.5 percent rate and qualifies as a cash flow hedge under ASC 815, Derivatives and Hedging. The interest rate swap matures on July 30, 2013. Realized gains and losses are reported as interest expense in the Consolidated Statements of Operations and as operating cash flows in the Consolidated Statements of Cash Flows. The Company had $75 thousand, net of tax, and $40 thousand, net of tax, of unrealized losses recorded in accumulated other comprehensive income as of June 30, 2011 and December 31, 2010, respectively. The notional amount for this contract was approximately $37.8 million and $51.2 million at June 30, 2011 and December 31, 2010, respectively.

The following presents the location of all assets and liabilities associated with the Company’s derivative instruments within the consolidated balance sheets:

		Fair Value at
Derivatives designated as hedging instruments:	Balance sheet	June 30, 2011	December 31, 2010
Interest rate swap	Other long-term liabilities	$120 thousand	$64 thousand

The following presents the losses recorded from the derivative instruments and the location within the consolidated statements of operations:

		For the three months
Derivatives designated as hedging instruments:	Statement of Operations	Ended June 30, 2011
Interest rate swap	Interest expense	$57 thousand
		For the six months
Derivatives designated as hedging instruments:	Statement of Operations	Ended June 30, 2011
Interest rate swap	Interest expense	$116 thousand