Interest Rate Swap Agreements

3 Months Ended

Mar. 31, 2013

Interest Rate Swap Agreements

12. Interest Rate Swap Agreements

The Company is currently a party to three interest rate swap agreements that qualify for cash flow hedge accounting. The fair values of the interest rate swaps are recorded on the Company’s condensed consolidated balance sheet as an asset or liability with the effective portion of the interest rate swaps’ gains or losses reported as a component of accumulated other comprehensive loss and the ineffective portion reported in earnings. The changes in fair values are reclassified from accumulated other comprehensive loss into earnings in the same period that the hedged items affect earnings. For the three months ended March 31, 2013 and 2012, the Company reclassified approximately $1,412 and $3,107, respectively, from accumulated other comprehensive loss into earnings.

The valuation technique used to determine fair value is the income approach and under this approach, the Company uses projected future interest rates as provided by counterparties to the interest rate swap agreements and the fixed rates that the Company is obligated to pay under these agreements. Therefore, the Company’s measurements use significant unobservable inputs, which fall in Level 3 of the U.S. GAAP hierarchy as defined by FASB ASC Topic 820-10-35. There were no changes in valuation techniques during the period and no transfers in or out of Level 3. See Note 15 for a summary of unrealized gains or losses recorded in accumulated other comprehensive loss and earnings.

Below is a summary of the Company’s current interest rate swap agreements designated as cash flow hedges as of March 31, 2013:

												Estimated
Nominal Amount		Effective Date	Pay Rate			Receive Rate	Expiration Date	Current Liability  (1)		Long- Term Liability  (2)		Total Fair Value at March 31, 2013
	$    175,000	December 2010		1.3975	%	1-Month LIBOR	September 2015		1,915		2,575		4,490
	$    175,000	December 2010		1.4000	%	1-Month LIBOR	September 2015		1,950		2,608		4,558
	$    100,000	November 2011		1.7150	%	1-Month LIBOR	April 2016		1,434		2,506		3,940
	$    450,000							$	5,299	$	7,689	$	12,988

⁽¹⁾  Included in accounts payable and accrued expenses on the condensed consolidated balance sheet as of March 31, 2013.

⁽²⁾  Included in other long-term liabilities on the condensed consolidated balance sheet as of March 31, 2013.

The Company amortized approximately $988 to interest expense during the three months ended March 31, 2012 related to a previously terminated interest rate swap agreement. The accumulated other comprehensive loss related to the terminated interest rate swap agreement became fully amortized in August 2012. See Note 15 for additional information about the Company’s fair value measurements related to its interest rate swap agreements.