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Derivative Instruments
 12 Months Ended
Dec. 31, 2011
Derivative Instruments  
Derivative Instruments

7. Derivative Instruments

 

The Company entered into an interest rate swap agreement in April 2006, the objective of which was to hedge exposure to the variability of the future expected cash flows attributable to the variable interest rate of a portion of the Company's outstanding balance under its revolving credit agreement. The interest rate swap matured in April 2011. Prior to April 2011, the interest rate swap had a notional amount of $50,000,000. The Company paid to the counterparty a fixed rate of 5.365% of the notional amount of the interest rate swap and received a floating rate from the counterparty based on LIBOR. In the opinion of management and as permitted by Accounting Standards Codification Topic 815, Derivatives and Hedging (“ASC 815”), the interest rate swap (as a cash flow hedge) was a fully effective hedge. Payments or receipts of cash under the interest rate swap were shown as a part of operating cash flows, consistent with the interest expense incurred pursuant to the revolving credit agreement. An increase in the fair value of the interest rate swap, net of tax, of $515,000, $1,334,000 and $1,002,000 was included in other comprehensive income in the years ended December 31, 2011, 2010 and 2009, respectively. Accumulated other comprehensive loss, net of income taxes, was $0 and $515,000 as of December 31, 2011 and 2010, respectively.

 

 

The fair values of derivative instruments in the consolidated balance sheets as of December 31, 2011 and 2010 were as follows (in thousands):

 

   Asset Derivatives  Liability Derivatives
   2011 2010 2011 2010
   Balance     Balance     Balance     Balance    
   Sheet Fair  Sheet  Fair Sheet  Fair Sheet  Fair
    Location Value Location  Value Location  Value Location  Value
                      
Derivatives                     
 designated as  Other    Other     Other    Other   
 hedging  assets,    assets,    long-term    long-term   
 instruments  net $ - net $ - liabilities $ - liabilities $ 902