Derivative Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2012

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 hadoutstanding pay-fixed interest rate swaps with a total notional amount of $455 million to hedge the LNG Holdings $455 million term loan, which was refinanced in February 2012. These interest rate swaps were accounted for as cash flow hedges, with the effective portion of changes in their fair value recorded in Accumulated other comprehensive income and reclassified into Interest expense in the same periods during which the related interest payments on long-term debt impacted earnings. These swaps terminated in the first quarter of 2012.

For the predecessor period in 2012 that hedge accounting treatment was applied, there was no swap ineffectiveness.

Treasury Rate Locks. As of March 31, 2012, the Company had no outstanding treasury rate locks. However, certain of its treasury rate locks that settled in prior periods were associated with interest payments on outstanding long-term debt. During the predecessor periods, these treasury rate locks were 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.

The Company had no asset derivative instruments at March 31, 2012 and December 31, 2011. The following table summarizes the fair value amounts of the Company's liabilityderivative instruments and their location reported in the unaudited interim Condensed Consolidated Balance Sheet at the dates indicated.

		Fair Value (1)
		Successor		Predecessor
	Balance Sheet Location	March 31, 2012		December 31, 2011
		(In thousands)		(In thousands)
Cash Flow Hedges:
Interest rate contracts	Other current liabilities	$	-	$	4,148

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.

			Successor		Predecessor
			Period from Acquisition (March 26, 2012) to March 31, 2012		Period from January 1, 2012 to March 25, 2012		Three months ended March 31, 2011
			(In thousands)		(In thousands)
Cash Flow Hedges: (1)
	Change in fair value - increase in Accumulated other comprehensive
		loss, excluding tax expense effect of $0, $0 and $287, respectively	$	-	$	-	$	715
	Reclassification of unrealized loss (gain) from Accumulated other
		comprehensive loss - increase (decrease) of Interest expense,
		excluding tax expense effect of $0, $1,700 and $2,164, respectively		-		4,215		5,386

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