Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Derivative Instruments and Hedging Activities

10. Derivative Instruments and Hedging Activities

The Company is exposed to certain risks in its ongoing business operations. The primary risk managed by using derivative instruments is interest rate risk. Interest rate swaps and treasury rate locks are the principal derivative instruments used by the Company to manage interest rate risk associated with its long-term borrowings, although other interest rate derivative contracts may also be used from time to time. The Company recognizes all derivative instruments as assets or liabilities at fair value in the unaudited interim Condensed Consolidated Balance Sheet.

Interest Rate Contracts

The Company may enter into interest rate swaps to manage its exposure to changes in interest payments on long-term debt attributable to movements in market interest rates, and may enter into treasury rate locks to manage its exposure to changes in future interest payments attributable to changes in treasury rates prior to the issuance of new long-term debt instruments.

Interest Rate Swaps.The Company has outstanding pay-fixed interest rate swaps with a total notional amount of $455 million applicable to the LNG Holdings $455 million term loan. These interest rate swaps are accounted for as cash flow hedges, with the effective portion of changes in their fair value recorded in Accumulated other comprehensive loss and reclassified into Interest expense in the same periods during which the related interest payments on long-term debt impact earnings. As of June 30, 2011, approximately $8.9 million of net after-tax losses in Accumulated other comprehensive loss related to these interest rate swaps is expected to be amortized into Interest expense during the next twelve months. Any ineffective portion of the cash flow hedge is reported in current-period earnings.

Treasury Rate Locks. As of June 30, 2011, the Company had no outstanding treasury rate locks. However, certain of its treasury rate locks that settled in prior periods are associated with interest payments on outstanding long-term debt. These treasury rate locks are accounted for as cash flow hedges, with the effective portion of their settled value recorded in Accumulated other comprehensive loss and reclassified into Interest expense in the same periods during which the related interest payments on long-term debt impact earnings. As of June 30, 2011, approximately $166,000 of net after-tax losses in Accumulated other comprehensive loss related to these treasury rate locks will be amortized into Interest expense during the next twelve months.

The Company had no asset derivative instruments at June 30, 2011 and December 31, 2010. The following table summarizes the fair value amounts of the Company's liabilityderivative instruments and their location in the unaudited interim Condensed Consolidated Balance Sheet at the dates indicated.

	Balance Sheet	June 30,		December 31,
	Location	2011		2010
			(In thousands)
Cash Flow Hedges:
Interest rate contracts	Other current liabilities	$	14,965	$	19,694
	Other noncurrent liabilities		-		4,652
		$	14,965	$	24,346

The following table summarizes the location and amount of derivative instrument gains and losses reported in the Company's unaudited interim condensed consolidated financial statements for the periods presented.

			Three Months Ended June 30,				Six Months Ended June 30,
			2011		2010		2011		2010
			(In thousands)
Cash Flow Hedges: (1)
	Change in fair value - increase in Accumulated other
		comprehensive loss, excluding tax expense effect of $244,
		$1,308, $531 and $3,614, respectively	$	605	$	3,253	$	1,320	$	8,989
	Reclassification of unrealized loss from Accumulated
		other comprehensive loss - increase of Interest
		expense, excluding tax expense effect of $2,190, $2,187,
		$4,354 and $4,373, respectively		5,450		5,442		10,836		10,883

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• See Note 6 – Comprehensive Income for additional related information.