Derivative Financial Instruments

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

To manage interest rate risk, the Company enters into interest rate swap contracts to adjust the amount of total debt that is subject to variable interest rates. Such contracts effectively fix the borrowing rates on floating rate debt to limit the exposure against the risk of rising interest rates. The Company does not enter into interest rate swap contracts for speculative or trading purposes and it has only entered into interest rate swap contracts with financial institutions that it believes are creditworthy counterparties. The Company monitors the financial institutions that are counterparties to its interest rate swap contracts and to the extent possible diversifies its swap contracts among various counterparties to mitigate exposure to any single financial institution.

The Company’s risk management objective and strategy with respect to interest rate swap contracts is to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to interest payments on a portion of its outstanding debt. The Company is meeting its objective by hedging the risk of changes in its cash flows (interest payments) attributable to changes in the LIBOR index rate, the designated benchmark interest rate being hedged (the “hedged risk”), on an amount of the Company’s debt principal equal to the then-outstanding swap notional. The forecasted interest payments are deemed to be probable of occurring.

As of June 30, 2013, the Company had interest rate swap contracts outstanding with notional amounts aggregating $817,625, which consists of interest rate swap contracts with notional amounts of $617,625 that are designated as cash flow hedges and interest rate swap contracts with notional amounts of $200,000 that are not designated as hedging instruments. The Company’s outstanding interest rate swap contracts have varying maturities ranging from September 2015 to July 2017. At June 30, 2013, the Company’s interest rate swap contracts designated as cash flow hedges were highly effective, in all material respects.

The Company assesses, both at the hedge’s inception and on an ongoing basis, hedge effectiveness based on the overall changes in the fair value of the interest rate swap contracts. Hedge effectiveness of the interest rate swap contracts is based on a hypothetical derivative methodology. Any ineffective portion of the interest rate swap contracts is recorded in current-period earnings. Changes in fair value of interest rate swap contracts not designated as hedging instruments are recognized in earnings and included in interest expense.

The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are as follows:

	Liability Derivatives
	Balance Sheet Location	Fair Value
		June 30, 2013		December 31, 2012
Derivatives designated as hedging instruments:
Interest rate swap contracts	Other liabilities	$	9,286	$	13,398
Derivatives not designated as hedging instruments:
Interest rate swap contracts	Other liabilities	5,943		8,739
Total derivatives		$	15,229	$	22,137

The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments are as follows:

	Amount of Gain or (Loss) Recognized  in Other Comprehensive  Income (“OCI”) on Derivatives  (Effective Portion)					Location of Gain or (Loss) Reclassified from Accumulated OCI into Earnings  (Effective Portion)	Amount of Gain or (Loss) Reclassified  from Accumulated OCI into  Earnings (Effective Portion)(a)
	Three Months Ended June 30,						Three Months Ended June 30,
	2013		2012				2013		2012
Derivatives in cash flow hedging relationships:
Interest rate swap contracts	$	348	$	(5,794	)	Interest expense	$	1,912	$	(2,166	)

(a) There were no gains or losses recognized in earnings related to any ineffective portion of the hedging relationship or related to any amount excluded from the assessment of hedge effectiveness for the three months ended June 30, 2013 and 2012.

	Amount of Gain or (Loss) Recognized  in Other Comprehensive  Income (“OCI”) on Derivatives  (Effective Portion)					Location of Gain or (Loss) Reclassified from Accumulated OCI into Earnings  (Effective Portion)	Amount of Gain or (Loss) Reclassified  from Accumulated OCI into  Earnings (Effective Portion)(a)
	Six Months Ended June 30,						Six Months Ended June 30,
	2013		2012				2013		2012
Derivatives in cash flow hedging relationships:
Interest rate swap contracts	$	289	$	(8,728	)	Interest expense	$	3,823	$	(4,280	)

(a) There were no gains or losses recognized in earnings related to any ineffective portion of the hedging relationship or related to any amount excluded from the assessment of hedge effectiveness for the six months ended June 30, 2013 and 2012.

The amount of the gains and losses related to the Company's derivative financial instruments not designated as hedging instruments are as follows:

	Location of Gain or (Loss) Recognized in Earnings on Derivatives	Amount of Gain or (Loss) Recognized in Earnings  on Derivatives
		Three Months Ended June 30,				Six Months Ended June 30,
		2013		2012		2013		2012
Derivatives not designated as hedging relationships:
Interest rate swap contracts	Interest expense	$	1,431	$	—	$	1,510	$	—