XML 98 R20.htm IDEA: XBRL DOCUMENT v2.4.0.6
DERIVATIVE INSTRUMENTS
12 Months Ended
Dec. 31, 2012
DERIVATIVE INSTRUMENTS [Abstract]  
DERIVATIVE INSTRUMENTS

12. DERIVATIVE INSTRUMENTS

 

We have used derivative instruments from time to time to manage risks related to interest rates. During the year ended December 31, 2010, our derivative instruments were limited to interest rate swaps. We are exposed to one-month LIBOR interest rate risk on our credit facility. In August 2010, our interest rate swap that we entered into in August 2007 expired. The interest rate swap was a $100.0 million pay fixed, receive floating interest rate swap to hedge the variability in our cash flows associated with changes in one-month LIBOR interest rates. There is no associated asset or liability on our consolidated balance sheets as of December 31, 2012 or 2011.

 

Cash-Flow Hedges

 

For a derivative instrument designated as a cash-flow hedge, the effective portion of the derivative's gain (loss) is initially reported as a component of other comprehensive income and is subsequently recognized in earnings in the same period or periods during which the hedged exposure is recognized in earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current earnings. Monthly settlements with the counterparties are recognized in the same line item, "Interest expense," as the interest costs associated with our credit facility. Accordingly, cash settlements are included in operating cash flows and were $0.0 million, $0.0 million and $3.0 million for the years ended December 31, 2012, 2011 and 2010, respectively. Concurrent with the refinancing of our credit facility in May 2010, we dedesignated the cash flow hedge associated with our remaining interest rate swap, which expired in August 2010.

 

During the years ended December 31, 2012, 2011 and 2010, we recognized the following gains and interest expense related to interest rate swaps (in thousands):

 

    2012   2011   2010
Effective portion:                        
Gain recognized in other comprehensive income, net of  tax effect of $0.0 million, $0.0 million and $0.5 million in 2012, 2011 and 2010, respectively   $ -     $ -     $ 1,009  
Ineffective portion:                        
Unrealized gain on change in fair value of interest rate
  swaps recognized in other expense
  $ -     $ -     $ 1,228  
Interest expense related to monthly cash settlements:                        
Interest expense   $ -     $ -     $ (2,828 )

 

For further disclosure on our policy for accounting for derivatives and hedges, see Note 7.