Accounting for Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2011

Accounting for Derivative Instruments and Hedging Activities [Abstract]

Accounting for Derivative Instruments and Hedging Activities

8. Accounting for Derivative Instruments and Hedging Activities

The Company uses interest rate swap agreements to manage its interest costs and reduce the Company's exposure to increases in floating interest rates. The Company manages its exposure to fluctuations in interest rates by maintaining a mix of fixed and variable rate debt. Using interest rate swap agreements, the Company agrees to exchange, at specified intervals through 2015, the difference between fixed and variable interest amounts calculated by reference to agreed-upon notional principal amounts.

The Company does not hold or issue derivative instruments for speculative trading purposes. The Company has certain interest rate derivative instruments that have been designated as cash flow hedging instruments. Such instruments effectively convert variable interest payments on certain debt instruments into fixed payments. For qualifying hedges, realized derivative gains and losses offset related results on hedged items in the consolidated statements of operations. The Company has formally documented, designated and assessed the effectiveness of transactions that receive hedge accounting. For the three and six months ended June 30, 2011 and 2010, there was no cash flow hedge ineffectiveness on interest rate swap agreements.

The effect of derivative instruments on the Company's consolidated balance sheets is presented in the table below.

	June 30, 2011			December 31, 2010
Other long-term liabilities:
Fair value of interest rate derivatives designated as hedges	$	66		$	57
Accumulated other comprehensive loss:
Interest rate derivatives designated as hedges	$	(66	)	$	(57	)

Changes in the fair value of interest rate agreements that are designated as hedging instruments of the variability of cash flows associated with floating-rate debt obligations, and that meet effectiveness criteria are reported in other comprehensive loss. The amounts are subsequently reclassified as an increase or decrease to interest expense in the same periods in which the related interest on the floating-rate debt obligations affected earnings (losses).

The effect of derivative instruments on the Company's consolidated statements of operations is presented in the table below.

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Other comprehensive loss:
Loss on interest rate derivatives designated as hedges (effective portion)	$	(20	)	$	(50	)	$	(9	)	$	(50	)
Amount of loss reclassified from accumulated other comprehensive loss into interest expense	$	(10	)	$	(8	)	$	(20	)	$	(8	)

As of June 30, 2011 and December 31, 2010, the Company had $2.0 billion in notional amounts of interest rate swap agreements outstanding. The notional amounts of interest rate instruments do not represent amounts exchanged by the parties and, thus, are not a measure of exposure to credit loss. The amounts exchanged were determined by reference to the notional amount and the other terms of the contracts.