Derivative Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments [Abstract]

Derivative Instruments

Note 16 – Derivative Instruments

As more fully described in our 2013 Annual Report, we are exposed to interest rate changes from our outstanding floating rate borrowings.  We manage our fixed to floating rate debt mix to mitigate the impact of adverse changes in interest rates on earnings and cash flows and on the market value of our borrowings.  From time to time, we may enter into interest rate hedging contracts, which effectively convert a portion of our variable rate debt to a fixed rate over the term of interest rate swaps or fix the maximum variable rate with an interest rate cap.  For an explanation of the impact of swaps on our interest paid for the periods presented, see Note 11 – Notes Payable.

As part of our US Minetta and Orpheum Theatres Loan, we entered into a five year LIBOR rate cap of 4.00% with a loan margin of 2.75%.  See Note 11 – Notes Payable. Additionally, on June 3, 2013, we entered into a new swap agreement for our BofA Revolver that will take effect on December 31, 2014 with a pay fixed rate of 1.15% and an expiration date of October 31, 2017.

The following table sets forth the terms of our interest rate swap and cap derivative instruments at September 30, 2014:

Type of Instrument		Notional Amount	Pay Fixed Rate	Receive Variable Rate	Maturity Date
Interest rate swap	$	62,750,000	5.500%	2.715%	June 30, 2016
Interest rate swap	$	27,913,000	1.200%	0.233%	October 31, 2017
Interest rate swap	$	31,500,000	1.150%	0.150%	October 31, 2017
Interest rate cap	$	7,500,000	4.000%	0.000%	June 1, 2018

In accordance with FASB ASC 815-10-35, Subsequent Valuation of Derivative Instruments and Hedging Instruments (“FASB ASC 815-10-35”), we marked our interest rate swap and cap instruments to market on the consolidated balance sheet resulting in a decrease in interest expense of $958,000 and decrease of $1.0 million during the three and nine months ended September 30, 2014, respectively, and a decrease of  $209,000 and $1.6 million in interest expense during the three and nine months ended September 30, 2013, respectively.  At September 30, 2014 and December 31, 2013, we recorded as other long-term liabilities the fair market value of our interest rate swaps and cap of $2.3 million and $3.3 million, respectively.  In accordance with FASB ASC 815-10-35, we have not designated any of our current interest rate swap or cap positions as financial reporting hedges.