Derivative Financial Instruments

9 Months Ended

Sep. 30, 2011

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS

Effective September 30, 2011, the Company entered into an interest rate swap agreement with an initial notional amount of $40.0 million of the new term loan to manage its exposure to interest rate changes.  The swap effectively converts a portion of the Company’s variable rate debt under the new term loan to a fixed rate for a period of two years and without exchanging the notional principal amounts.

Under this agreement, the Company receives a floating rate based on the 90-day LIBOR rate and pays a fixed rate of 4.68% (including the applicable margin of 4.00%) on the outstanding notional amount. The swap fixed rate was structured to mirror the payment terms of the term loan.  The fair value of the swap at inception was zero.  It is not expected that any gains or losses will be reported in the statement of operations during the term of the agreement as the swap is expected to be highly effective through its maturity based on the matching terms of the swap and facility agreements.  The interest rate swap agreement matures on September 30, 2013.

If, at any time, the swap is determined to be ineffective, in whole or in part, due to changes in the interest rate swap or underlying debt agreements, the fair value of the portion of the swap determined to be ineffective will be recognized as a gain or loss in the statement of operations for the applicable period.

During the second quarter of 2011, the Company incurred a charge of $0.3 million for the termination of an interest rate swap that was tied to our previous term loan.  Under the previous interest rate swap agreement, the Company received a floating rate based on the 90-day LIBOR rate and paid a fixed rate of 5.10% (including the applicable margin of 1.5%) on the outstanding notional amount.   The fair value of the swap at December 31, 2010 was $0.5 million and was recorded in other long-term liabilities and was designated as a cash flow hedge.

The amount recognized in other comprehensive income was as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011		2010
Gain (loss) recognized in other comprehensive income, net of tax	$	-	$	(2	)	$	282	$	(5	)