Derivative Information

6 Months Ended

Jun. 30, 2011

Derivative Information [Abstract]

Derivative Information

Note 13 — Derivative Information

We follow the provisions of FASB ASC Topic 815, “Derivatives and Hedging Activities,” which establish accounting and disclosure standards regarding a company’s derivative instruments and hedging activities.

We were required by our original Credit Facility to convert 50% of the outstanding term loan into a fixed interest rate for a period not less than two years. Our objective of entering into hedge transactions (or interest rate swaps) using derivative financial instruments was to reduce the variability of cash flows associated with variable-rate loans and comply with the terms of our Credit Facility. As changes in interest rates impact future interest payments, the hedges provided an offset to the rate changes. The swap agreements expired in June 2011. The Amendment to our Credit Facility does not require us to enter into any hedge agreements.

In April 2007, we entered into interest rate swap agreements with notional values of $312.5 million, at a fixed rate of 5.09%, and $125.0 million, at a fixed rate of 4.97%, both of which expired in June 2011. These swap arrangements effectively changed the underlying debt from a variable interest rate to a fixed interest rate for the term of the swap agreements. All of the swap agreements were issued by Credit Suisse International. The swap agreements were designated as, and met the criteria for, cash flow hedges and were not considered speculative in nature.

With our amended Credit Facility, our interest rate swaps ceased to be effective and hedge accounting was discontinued effective March 22, 2011 and going forward, primarily related to the LIBOR floor of 1.5% as established under the Amendment. As a result, our deferred losses of $4,928,000 recorded in other comprehensive income were frozen and were amortized into earnings over the original remaining term of the hedged transaction. All subsequent changes in the fair value of the swaps were recorded directly to interest expense. We recorded a loss of $4,480,000 related to the amortization in the second quarter of 2011. In addition, we recorded a gain of $5,246,000 related to the change in fair value of the interest rate swaps. The net amount of $766,000 is a non-cash gain and did not impact the amount of cash interest paid during the quarter. For the six months ended June 30, 2011, we recorded a loss of $4,928,000 related to amortization of our deferred losses and a gain of $6,439,000 related to the change in fair value of the interest rate swaps. The net amount of $1,511,000 is a non-cash gain and did not impact the amount of cash interest paid during the period.

A summary of the aggregate contractual or notional amounts, balance sheet location and estimated fair values of our derivative financial instruments are as follows (dollar amounts in thousands):

	Contractual/			Estimated Fair
	Notional		Balance Sheet	Value
	Amount		Location	Asset		(Liability)
Year ended December 31, 2010:
Interest rate swaps	$	437,500	Current liabilities	$	-	$	(10,353	)
Six months ended June 30, 2011:
	$	-	-	$	-	$	-

A summary of the effect of cash flow hedges on our financial statements for the three and six months ended June 30 is as follows (dollar amounts in thousands):

	Effective Portion
				Income Statement
				Location of
	Amount of			Swap Interest	Swap Interest
	Gain (Loss)			Reclassified From	Reclassified From
	Recognized			Accumulated	Accumulated		Ineffective Portion
	in Other			Other	Other		Income
Type of Cash	Comprehensive			Comprehensive	Comprehensive		Statement	Amount
Flow Hedge	Income			Income	Income		Location	Recognized
Three Months Ended June 30, 2010:
Interest rate swaps	$	(268	)	Interest expense	$	5,265	Interest expense	$	811
Three Months Ended June 30, 2011:
Interest rate swaps	$	-		Interest expense	$	-	Interest expense	$	(766	)
Six Months Ended June 30, 2010:
Interest rate swaps	$	(3,083	)	Interest expense	$	10,518	Interest expense	$	1,469
Six Months Ended June 30, 2011:
Interest rate swaps	$	(89	)	Interest expense	$	4,672	Interest expense	$	(1,511	)