Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities

10. Derivative Instruments and Hedging Activities

During the quarter ended September 30, 2012, the interest rate swap purchased by 2 ^nd Story, as further described in Note 9, was intended to reduce the risk that the Company’s cash flows and earnings will be adversely affected by interest rate fluctuations. The Company recognizes derivative instruments as either assets or liabilities on its unaudited condensed consolidated balance sheets at fair value. The Company records changes in the fair value of the derivatives as gains or losses in the unaudited consolidated statements of comprehensive income in other loss (income), net, or to accumulated other comprehensive income in the unaudited consolidated balance sheets.

The fair values of outstanding derivative instruments were as follows (in thousands):

	Balance sheet location	Fair value of derivative instruments
		As of September 30, 2012		As of December 31, 2011
Derivative liabilities
Derivative designated as a hedging instrument:
Interest rate contract (interest rate swap)	Current liabilities - derivative instruments	$	459	$	—
Derivative not designated as a hedging instrument:
Equity contract (the Warrant)	Current liabilities - derivative instruments		10,492		—
Total derivative liabilities		$	10,951	$	—

The derivative instrument in a hedging relationship had no effect on income for any and all periods presented.

The effect of the derivative instrument not designated as hedging instruments on income is summarized below (in thousands):

			Losses recognized in other loss, net
	Location		Three months ended September 30,				Nine months ended September 30,
Derivative not designated as hedging instrument			2012		2011		2012		2011
Equity contract (the Warrant)		Derivative instruments	$	4,335	$	—	$	4,274	$	—