Derivative Financial Instruments

9 Months Ended

Sep. 30, 2011

Notes to Condensed Consolidated Financial Statements [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company is party to an interest rate swap agreement that effectively converts its variable rate interest payments to a fixed rate on amounts due under the lease arrangement discussed in Note 9.  The Company’s interest rate swap agreement is designated as a cash flow hedge and is required to be measured at fair value on a recurring basis.

The Company endeavors to utilize the best available information in measuring fair value.  The interest rate swap is valued based on quoted data from the counterparty, corroborated with indirectly observable market data, which, combined, are deemed to be a Level 2 input in the fair value hierarchy.  At September 30, 2011 and December 31, 2010, the Company recorded a liability of $3,705 and $4,706, respectively, in other currentliabilities on the condensed consolidated balance sheets for the fair value of the swap.  The effective portion of the related gains or losses on the swap is deferred in accumulated other comprehensive loss.  No ineffectiveness was recorded in the condensed consolidated statements of income during the three and nine months ended September 30, 2011 and 2010.  The loss, net of tax, reclassified from accumulated other comprehensive loss to interest expense related to the effective portion of the interest rate swap was $(301) and $(884) during the three and nine month periods ended September 30, 2011, respectively. The loss, net of tax, reclassified from accumulated other comprehensive loss to interest expense related to the effective portion of the interest swap was $(207) and $(632) during the three and nine month periods ended September 30, 2010, respectively.

Unrealized gains, net of tax, of $223 and $612 related to the swap were recorded in accumulated other comprehensive loss during the three and nine months ended September 30, 2011, respectively. Unrealized losses, net of tax, of $(40) and $(207) related to the swap were recorded in accumulated other comprehensive loss during the three and nine months ended September 30, 2010, respectively.  The amount of loss, net of tax, expected to be reclassified from accumulated other comprehensive loss to interest expense over the next twelve months is $1,147. At September 30, 2011 and December 31, 2010, cumulative unrealized net losses, net of tax, related to the swap of $(2,264) and $(2,876) were recorded in accumulated other comprehensive loss. These deferred amounts are recognized in interest expense, net, in the period in which the related interest payments being hedged are recognized in expense.