Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2012

Fair Value of Financial Instruments [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments has been estimated by the Company using available market information as of March 31, 2012 and December 31, 2011, and valuation methodologies considered appropriate. The estimates presented are not necessarily indicative of amounts the Company could realize in a current market exchange (in thousands):

	March 31, 2012				December 31, 2011
	Carrying		Estimated Fair		Carrying		Estimated Fair
	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	$	129,298	$	129,298	$	129,865	$	129,865
Available-for-sale securities		34,354		34,354		31,582		31,582
Trading securities		35,944		35,944		30,486		30,486
Liabilities:
Credit Facility		5,969,062		5,894,354		5,979,383		5,780,877
8 7/ 8% Senior Notes		931,016		968,200		1,777,617		1,842,322
8% Senior Notes		2,024,694		2,067,500		1,000,000		995,000
Other debt		345,465		345,465		41,143		41,143

The estimated fair value is determined using the methodologies discussed below in accordance with accounting standards related to the determination of fair value based on the U.S. GAAP fair value hierarchy as discussed in Note 13. The estimated fair value for financial instruments with a fair value that does not equal its carrying value is considered a Level 2 valuation. The Company utilizes the market approach and obtains indicative pricing from the administrative agent to our Credit Facility to determine fair values, which are validated through subscription services such as Bloomberg where relevant.

Cash and cash equivalents. The carrying amount approximates fair value due to the short-term maturity of these instruments (less than three months).

Available-for-sale securities. Estimated fair value is based on closing price as quoted in public markets.

Trading securities. Estimated fair value is based on closing price as quoted in public markets.

Credit Facility. Estimated fair value is based on information from the Company’s bankers regarding relevant pricing for trading activity among the Company’s lending institutions.

8 ⁷ /8% Senior Notes. Estimated fair value is based on the average bid and ask price as quoted by the bank who served as underwriters in the sale of these notes.

8% Senior Notes. Estimated fair value is based on the average bid and ask price as quoted by the bank who served as underwriters in the sale of these notes.

Other debt. The carrying amount of all other debt approximates fair value due to the nature of these obligations.

Interest rate swaps. The fair value of interest rate swap agreements is the amount at which they could be settled, based on estimates calculated by the Company using a discounted cash flow analysis based on observable market inputs and validated by comparison to estimates obtained from the counterparty. The Company incorporates credit valuation adjustments (“CVAs”) to appropriately reflect both its own nonperformance or credit risk and the respective counterparty’s nonperformance or credit risk in the fair value measurements. In adjusting the fair value of its interest rate swap agreements for the effect of nonperformance or credit risk, the Company has considered the impact of any netting features included in the agreements.

The Company assesses the effectiveness of its hedge instruments on a quarterly basis. For the three months ended March 31, 2012 and 2011, the Company completed an assessment of the cash flow hedge instruments and determined the hedges to be highly effective. The Company has also determined that the ineffective portion of the hedges do not have a material effect on the Company’s consolidated financial position, operations or cash flows. The counterparties to the interest rate swap agreements expose the Company to credit risk in the event of nonperformance. However, at March 31, 2012, each swap agreement entered into by the Company was in a net liability position so that the Company would be required to make the net settlement payments to the counterparties; the Company does not anticipate nonperformance by those counterparties. The Company does not hold or issue derivative financial instruments for trading purposes.

Interest rate swaps consisted of the following at March 31, 2012:

								Fair Value
	Notional Amount		Fixed Interest			Termination		of Liability
Swap #	(in 000’s)		Rate			Date		(in 000’s)
1	$	250,000		5.0185	%		May 30, 2012	$	1,845
2		150,000		5.0250	%		May 30, 2012		1,108
3		200,000		4.6845	%		September 11, 2012		3,750
4		100,000		3.3520	%		October 23, 2012		1,607
5		125,000		4.3745	%		November 23, 2012		3,140
6		75,000		4.3800	%		November 23, 2012		1,886
7		150,000		5.0200	%		November 30, 2012		4,524
8		200,000		2.2420	%		February 28, 2013		3,170
9		100,000		5.0230	%		May 30, 2013		5,218
10		300,000		5.2420	%		August 6, 2013		18,940
11		100,000		5.0380	%		August 30, 2013		6,320
12		50,000		3.5860	%		October 23, 2013		2,350
13		50,000		3.5240	%		October 23, 2013		2,303
14		100,000		5.0500	%		November 30, 2013		7,377
15		200,000		2.0700	%		December 19, 2013		5,130
16		100,000		5.2310	%		July 25, 2014		10,301
17		100,000		5.2310	%		July 25, 2014		10,302
18		200,000		5.1600	%		July 25, 2014		20,287
19		75,000		5.0405	%		July 25, 2014		7,405
20		125,000		5.0215	%		July 25, 2014		12,289
21		100,000		2.6210	%		July 25, 2014		4,453
22		100,000		3.1100	%		July 25, 2014		5,550
23		100,000		3.2580	%		July 25, 2014		5,881
24		200,000		2.6930	%		October 26, 2014		9,962
25		300,000		3.4470	%		August 8, 2016		27,989
26		200,000		3.4285	%		August 19, 2016		18,576
27		100,000		3.4010	%		August 19, 2016		9,185
28		200,000		3.5000	%		August 30, 2016		19,200
29		100,000		3.0050	%		November 30, 2016		7,691

The Company is exposed to certain risks relating to its ongoing business operations. The risk managed by using derivative instruments is interest rate risk. Interest rate swaps are entered into to manage interest rate fluctuation risk associated with the term loans in the Credit Facility. Companies are required to recognize all derivative instruments as either assets or liabilities at fair value in the condensed consolidated statement of financial position. The Company designates its interest rate swaps as cash flow hedges. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Assuming no change in March 31, 2012 interest rates, approximately $111.0 million of interest expense resulting from the spread between the fixed and floating rates defined in each interest rate swap agreement will be recognized during the next 12 months. If interest rate swaps do not remain highly effective as a cash flow hedge, the derivatives’ gains or losses resulting from the change in fair value reported through OCI will be reclassified into earnings.

The following tabular disclosure provides the amount of pre-tax (loss) gain recognized in the condensed consolidated balance sheets as a component of OCI during the three months ended March 31, 2012 and 2011 (in thousands):

Derivatives in Cash Flow Hedging Relationships	Amount of Pre-Tax (Loss) Gain Recognized in OCI on Derivative (Effective Portion)
	Three Months Ended March 31,
	2012			2011
Interest rate swaps	$	(23,122	)	$	4,113

The following tabular disclosure provides the location of the effective portion of the pre-tax loss reclassified from accumulated other comprehensive loss (“AOCL”) into interest expense on the condensed consolidated statements of income during the three months ended March 31, 2012 and 2011 (in thousands):

Location of Loss Reclassified from AOCL into Income (Effective Portion)	Amount of Pre-Tax Loss Reclassified from AOCL into Income (Effective Portion)
	Three Months Ended March 31,
	2012		2011
Interest expense, net	$	39,610	$	52,923

The fair values of derivative instruments in the condensed consolidated balance sheets as of March 31, 2012 and December 31, 2011 were as follows (in thousands):

	0000000		0000000	0000000		0000000	0000000		0000000	0000000		0000000
	Asset Derivatives						Liability Derivatives
	March 31, 2012			December 31, 2011			March 31, 2012			December 31, 2011
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments	Other assets, net	$	—	Other assets, net	$	—	Other long- term liabilities	$	237,739	Other long- term liabilities	$	254,228