Interest Rate Swap Agreements

6 Months Ended

Jun. 30, 2014

Interest Rate Swap Agreements

11. Interest Rate Swap Agreements

The Company is currently a party to three interest rate swap agreements that are used to hedge interest rate risk associated with the variable interest rates on the Company’s term loan debt and qualify for cash flow hedge accounting. The fair values of the interest rate swaps are recorded on the Company’s condensed consolidated balance sheet as an asset or liability with the effective portion of the interest rate swaps’ gains or losses reported as a component of accumulated other comprehensive loss and the ineffective portion reported in earnings. The changes in fair values are reclassified from accumulated other comprehensive loss into earnings in the same period that the hedged items affect earnings.

The valuation technique used to determine fair value is the income approach and under this approach, the Company uses projected future interest rates as provided by counterparties to the interest rate swap agreements and the fixed rates that the Company is obligated to pay under these agreements. Therefore, the Company’s measurements use significant unobservable inputs, which fall in Level 3 of the U.S. GAAP hierarchy as defined by FASB ASC Topic 820-10-35. There were no changes in valuation techniques during the period and no transfers in or out of Level 3. See Note 14 for a summary of unrealized gains or losses recorded in accumulated other comprehensive loss and earnings.

Below is a summary of the Company’s current interest rate swap agreements designated as cash flow hedges as of June 30, 2014:

Nominal Amount		Effective Date	Pay Rate			Receive Rate	Expiration Date	Current Liability (1)		Long- Term Liability (2)		Estimated Total Fair Value at June 30, 2014
$	175,000	December 2010		1.3975	%	1-Month LIBOR	September 2015	$	2,027	$	448	$	2,475
$	175,000	December 2010		1.4000	%	1-Month LIBOR	September 2015		2,058		436		2,494
$	100,000	November 2011		1.7150	%	1-Month LIBOR	April 2016		1,472		818		2,290
$	450,000							$	5,557	$	1,702	$	7,259

⁽¹⁾  Included in accounts payable and accrued expenses on the condensed consolidated balance sheet as of June 30, 2014.

⁽²⁾  Included in other long-term liabilities on the condensed consolidated balance sheet as of June 30, 2014.

The changes in accumulated other comprehensive loss, net of taxes, related to the Company’s interest rate swap agreements for the three and six months ended June 30, 2014 and 2013 were as follows:

	Interest Rate Swaps
	2014			2013
Beginning balances – April 1	$	(5,219	)	$	(8,091	)
Other comprehensive income (loss) before reclassifications, net of taxes of $504 and $(75)		(848	)		122
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of taxes of $895 and $888		1,509			1,468
Net other comprehensive income		661			1,590
Ending balances – June 30	$	(4,558	)	$	(6,501	)
	Interest Rate Swaps
	2014			2013
Beginning balances – January 1	$	(5,716	)	$	(8,867	)
Other comprehensive loss before reclassifications, net of taxes of $1,010 and $334		(1,827	)		(514	)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of taxes of $1,769 and $1,725		2,985			2,880
Net other comprehensive income		1,158			2,366
Ending balances – June 30	$	(4,558	)	$	(6,501	)