DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING

6 Months Ended

Jun. 30, 2013

DERIVITIVE FINANCIAL INSTRUMENTS AND HEDGING

DERIVITIVE FINANCIAL INSTRUMENTS AND HEDGING

NOTE 11 -    DERIVITIVE FINANCIAL INSTRUMENTS AND HEDGING

Information about our derivative financial instruments at June 30, 2013 and December 31, 2012 follows (dollars in thousands):

	June 30, 2013						December 31, 2012
	Number of Instruments	Notional Amount		Fair Value			Number of Instruments	Notional Amount		Fair Value
Interest rate swaps (asset)	3	$	29,899	$	199		—	$	—	$	—
Interest rate swaps (liability)	1	10,428		(19		)	4	41,095		(641		)
	4	$	40,327	$	180		4	$	41,095	$	(641	)

Our interest rate swaps are designated as cash flow hedges and are valued using a market approach, which is a Level 2 valuation technique. At June 30, 2013, three of our swaps were in an asset position and one was in a liability position. At December 31, 2012, all of our swaps were in a liability position. We have not posted any collateral related to these agreements and are not in breach of any financial provisions of the agreements. If we had breached any agreement provisions, we could have been required to settle our obligation under the agreement that was in a liability position at its termination value of less than $0.1 million at June 30, 2013.

Details of the location in the financial statements of the loss recognized on derivative financial instruments designated as cash flow hedges follow (in thousands):

	Second Quarter						First Six Months
	2013			2012			2013			2012
Gain (loss) recognized in accumulated other comprehensive income on derivative financial instruments (effective portion)	$	623		$	(296	)	$	645		$	(296	)
Gain (loss) reclassified from accumulated other comprehensive income to interest expense (effective portion)	$	(87	)	$	(16	)	$	(173	)	$	(16	)
Gain (loss) recognized in gain (loss) on derivative financial instruments (ineffective portion and amounts excluded from effectiveness testing)	$	2		$	(1	)	$	2		$	(1	)

Amounts reported in accumulated other comprehensive income related to derivative financial instruments will be reclassified to interest expense as interest payments are made on the hedged variable-rate debt.