Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2013

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Effective April 1, 2010, in order to reduce the volatility of cash outflows that arise from changes in interest rates, the Company entered into two interest rate swap agreements. These interest rate swap agreements are intended to hedge the Company’s mortgage loan related to its headquarters facility in Middletown, Rhode Island by fixing the interest rates specified in the mortgage loan to 5.91% for half of the principal amount outstanding and 6.07% for the remaining half of the principal amount outstanding as of April 1, 2010 until the mortgage loan expires on April 16, 2019.

As required by ASC Topic 815, Derivatives and Hedging, the Company records all derivatives on the balance sheet at fair value. As of September 30, 2013, the fair value of the derivatives is included in other accrued liabilities and the unrealized gain is included in accumulated other comprehensive income (loss).

As of September 30, 2013, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivatives	Notional (in thousands)		Asset (Liability)		Effective Date	Maturity Date	Index	Strike Rate
Interest rate swap	$	1,725	(181	)	April 1, 2010	April 1, 2019	1-month LIBOR	5.91	%
Interest rate swap	$	1,725	(195	)	April 1, 2010	April 1, 2019	1-month LIBOR	6.07	%

Hedges of Foreign Currency Risk

As a result of the acquisition of Headland Media Limited on May 11, 2013, the Company inherited foreign currency forward contracts that Headland Media Limited owned and that were intended to hedge currency fluctuations between the British Pound and U.S. Dollar and the British Pound and the Euro. As the Company's functional currency is the U.S. dollar and the majority of Headland Media Limited's foreign currency forward contracts were designated to hedge the U.S. dollar, it is expected there will be no additional purchases of any of these contracts going forward. These outstanding foreign currency forward contracts qualify as cash flow hedges intended to offset the effect of exchange rate fluctuations on forecasted sales, all of which were deemed effective.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. For the three and nine months ended September 30, 2013, an immaterial amount was recognized in earnings. As of September 30, 2013, we estimated that $50 in net gains will be reclassified from accumulated other comprehensive income to earnings during the twelve months ending September 30, 2014.

As of September 30, 2013, we had the following outstanding foreign currency forward contracts:

Notional (in millions)	Effective Date	Maturity Date	Index	Weighted-Average Strike Rate	Hedge Designation
0.5 USD	Various from October 2013 to December 2013	Various from October 2013 to December 2013	U.S. Dollar to GBP Exchange Rate	1.58 USD	Designated
1.8 USD	Various from January 2014 to December 2014	Various from January 2014 to December 2014	U.S. Dollar to GBP Exchange Rate	1.57 USD	Designated
0.12 EUR	Various from October 2013 to December 2013	Various from October 2013 to December 2013	Euro to GBP Exchange Rate	1.24 EUR	Designated
0.48 EUR	Various from January 2014 to December 2014	Various from January 2014 to December 2014	Euro to GBP Exchange Rate	1.16 EUR	Designated

The notional amounts above represent the total quantities we have outstanding over the remaining contracted periods.