Derivative Financial Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Interest Rate Swaps

On June 27, 2011, the Company entered into an interest rate swap agreement with a notional value of $450.0 million. The objective of the swap was to protect against the variability in expected future cash flows attributable to changes in the benchmark interest rate related to interest payments required under the 2011 Credit Agreement. The interest rate on the debt is subject to change due to fluctuations in the benchmark interest rate of 3-month LIBOR. The structure of the hedge was a three year amortizing interest rate swap based on a 1.17% fixed rate with quarterly fixed rate and floating rate payment dates beginning on July 18, 2011. The hedge was settled upon maturity in July 2014 and was accounted for as a cash flow hedge. Changes in the fair value of the effective portion of the hedge were reported in accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods in which the hedged transactions affected earnings. The Company recognized income of $1.1 million related to the effective portion of the hedge for the nine months ended September 30, 2014 in interest expense, net in the Condensed Consolidated Statements of Operations. Upon the prepayment of term loan A in the first quarter of 2014, the interest rate swap became fully ineffective. The ineffective portion of the change in the fair value of the hedge is recognized directly in earnings. The Company recognized income of approximately $1.0 million and $0.3 million for the three and nine months ended September 30, 2014, respectively, related to the ineffective portion of the hedge and the mark-to-market gain from the settlement in other income (loss) in the Condensed Consolidated Statements of Operations.

Interest Rate Cap

On June 27, 2011, the Company entered into an interest rate cap agreement related to interest payments required under the 2011 Credit Agreement with a notional value of $255.0 million. The objective of the cap was to protect against the variability in expected future cash flows attributable to changes in the benchmark interest rate above 2.00%. The interest rate on the debt is subject to change due to fluctuations in the benchmark interest rate of 3-month LIBOR. The structure of the hedge was a three year amortizing interest rate cap based on a strike price of 2.00% with quarterly fixed rate and floating rate payment dates beginning on July 7, 2011. The hedge was settled upon maturity in July 2014 and was accounted for as a cash flow hedge. Changes in the fair value of the hedge were reported in accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affected earnings.

The following table presents the fair values of the Company's derivative instruments as well as their classification within the Condensed Consolidated Balance Sheets as of December 31, 2013 (in thousands, except amounts in footnotes to the table). There were no outstanding derivative instruments as of September 30, 2014. See Note 11 for additional information related to the fair values of the Company's derivative instruments.

	December 31, 2013
Asset derivatives designated as cash flow hedging instruments:
Interest rate cap(1)	$	1
Liability derivatives designated as cash flow hedging instruments:
Interest rate swaps(2)	$	3,080

_______________________________________________________________________________

(1) $1 thousand was included in other current assets within the Condensed Consolidated Balance Sheet as of December 31, 2013.

(2) $3.1 million was included within other current liabilities within the Condensed Consolidated Balance Sheet as of December 31, 2013.

The following tables present the gains and losses from derivative instruments for the three and nine months ended September 30, 2014 and 2013 and their location within the condensed consolidated financial statements (in thousands).

	Gain (loss), net of tax, recognized in accumulated other comprehensive income (loss)					Gain, net of tax, reclassified from accumulated other comprehensive income (loss) to earnings(1)					Loss, net of tax, reclassified from accumulated other comprehensive income (loss) to earnings (ineffective portion) (2)
	Three months    ended    September 30,					Three months    ended    September 30,					Three months    ended    September 30,
Derivatives designated as cash flow hedging instruments	2014		2013			2014		2013			2014		2013
Interest rate swaps	$	—	$	1,057		$	—	$	(636	)	$	—	$	235
Interest rate cap	—		(3		)	—		—			—		—
Total	$	—	$	1,054		$	—	$	(636	)	$	—	$	235

	Gain (loss), net of tax, recognized in accumulated other comprehensive income (loss)					Gain, net of tax, reclassified from accumulated other comprehensive income (loss) to earnings(1)						Loss, net of tax, reclassified from accumulated other comprehensive income (loss) to earnings (ineffective portion)(2)
	Nine months ended   September 30,					Nine months ended   September 30,						Nine months ended   September 30,
Derivatives designated as cash flow hedging instruments	2014		2013			2014			2013			2014		2013
Interest rate swaps	$	1,303	$	3,538		$	(677	)	$	(1,866	)	$	1,053	$	235
Interest rate cap	—		(6		)	—			—			—		—
Total	$	1,303	$	3,532		$	(677	)	$	(1,866	)	$	1,053	$	235

_______________________________________________________________________________

(1) The effective portion of the interest rate swap amounts are reported within interest expense, net in the Condensed Consolidated Statements of Operations.

(2) The ineffective portion of the interest rate swap is reported within other income (loss) in the Condensed Consolidated Statements of Operations.