Derivative Instruments

12 Months Ended

Dec. 31, 2011

Derivative Instruments [Abstract]

Derivative Instruments

Note 13 – Derivative Instruments

     We are exposed to interest rate changes from our outstanding floating rate borrowings. We manage our fixed to floating rate debt mix to mitigate the impact of adverse changes in interest rates on earnings and cash flows and on the market value of our borrowings. From time to time, we may enter into interest rate hedging contracts, which effectively convert a portion of our variable rate debt to a fixed rate over the term of the interest rate swap. In the case of our Australian borrowings, we are presently required to swap no less than 75% of our drawdowns under our Australian Corporate Credit Facility into fixed interest rate obligations. In conjunction with this NAB Credit Facility, we entered into a five-year interest swap agreement, which swaps 100% of our variable rate term loan based on BBSY for a 5.50% fixed rate loan which steps down commensurate with the payments of the loan balance. At the time of entering into this NAB swap, our existing BOSI swap was "in-the-money" by $160,000. In lieu of a cash payment for the in-the-money BOSI swap, we negotiated a slightly lower fixed swap rate by 0.05% for our new NAB fixed rate swap. As of December 1, 2010, under the amended GE Capital Term Loan, we are required to swap no less than 50% of the original loan balance on that date of $37.5 million for the first three years of the loan. We elected to swap 100% of the original loan balance and have contracted for balance step-downs that correspond with the loan's principal payments through December 31, 2013. On December 3, 2010, as part of amending our GE Capital loan, we were required to cancel the existing $29.5 million hedge and replace it for a cost of $368,000.

     The following table sets forth the terms of our interest rate swap derivative instruments at December 31, 2011:

		Notional			Receive Variable
Type of Instrument		Amount	Pay Fixed Rate		Rate		Maturity Date
Interest rate swap	$	33,750,000	1.340	%	0.580	%	December 31, 2013
Interest rate swap	$	88,671,000	5.500	%	4.550	%	June 30, 2016

     In accordance with FASB ASC 815-20 – Derivatives and Hedging, we marked our interest swap instruments to market on the consolidated balance sheet resulting in a $5.0 million increase to interest expense during 2011, a $284,000 decrease to interest expense during 2010, and a $1.4 million decrease to interest expense during 2009. At December 31, 2011, we recorded the fair market value of an interest rate swap of $4.7 million as an other long-term liability. At December 31, 2010, we recorded the fair market value of an interest rate swap and a cap of $446,000 as other long-term assets and an interest rate swap of $181,000 as an other long-term liability. In accordance with FASB ASC 815-20, we have not designated any of our current interest rate swap positions as financial reporting hedges.