Derivative Financial Instruments

6 Months Ended

Jun. 30, 2011

Notes to Condensed Consolidated Financial Statements [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company is party to an interest rate swap agreement that effectively converts its variable rate interest payments to a fixed rate on amounts due under the lease arrangement discussed in Note 9.  The Company’s interest rate swap agreement is designated as a cash flow hedge and is required to be measured at fair value on a recurring basis.

The Company endeavors to utilize the best available information in measuring fair value.  The interest rate swap is valued based on quoted data from the counterparty, corroborated with indirectly observable market data, which, combined, are deemed to be a Level 2 input in the fair value hierarchy.  At June 30, 2011 and December 31, 2010, the Company recorded a liability of $4,070 and $4,706, respectively, in other currentliabilities on the condensed consolidated balance sheets for the fair value of the swap.  The effective portion of the related gains or losses on the swap is deferred in accumulated other comprehensive loss.  No ineffectiveness was recorded in the condensed consolidated statements of income during the three and six months ended June 30, 2011 and 2010.  The loss, net of tax, reclassified from accumulated other comprehensive loss to interest expense related to the effective portion of the interest rate swap was $371 and $583 during the three and six month periods ended June 30, 2011, respectively. The loss, net of tax, reclassified from accumulated other comprehensive loss to interest expense related to the effective portion of the interest swap was $212 and $425 during the three and six month periods ended June 30, 2010, respectively.

Unrealized gains, net of tax, of $96 and $389 related to the swap were recorded in accumulated other comprehensive loss during the three and six months ended June 30, 2011, respectively. Unrealized losses, net of tax, of $(112) and $(167) related to the swap were recorded in accumulated other comprehensive loss during the three and six months ended June 30, 2010, respectively.  The amount of loss, net of tax, expected to be reclassified from accumulated other comprehensive loss to interest expense over the next twelve months is $1,168. At June 30, 2011 and December 31, 2010, cumulative unrealized net losses related to the swap of $2,487 and $2,876 (net of tax) were recorded in accumulated other comprehensive loss. These deferred amounts are recognized in interest expense, net, in the period in which the related interest payments being hedged are recognized in expense.