INTEREST RATE SWAPS

12 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

INTEREST RATE SWAPS

INTEREST RATE SWAPS

Our credit facility exposes us to short-term changes in market interest rates as our interest obligations on these instruments are periodically re-determined based on the prevailing Eurodollar rate. We enter into interest rate swaps to limit our exposure to fluctuations and volatility in interest rates. We do not engage in derivative transactions for speculative or trading purposes and we are not a party to leveraged derivatives.

At September 30, 2012, we had five$50.0 million notional interest rate swaps in effect. These interest rate swaps fix the interest on $250 million in borrowings at 3.4% through September 2014.

Fair Value of Derivatives

The following table presents the carrying amount of our cash flow hedge derivative contracts included in the Consolidated Balance Sheets as of September 30, 2012 and 2011 (in thousands):

		September 30,
Type of Contract	Balance Sheet Classification	2012		2011
Short term interest rate swaps	Accrued liabilities	$	1,705	$	988
Long term interest rate swaps	Other long-term liabilities	1,414		631
Total derivative contracts, net		$	3,119	$	1,619

We record the interest rate derivative contracts at fair value on our consolidated balance sheets (See Note 10). Hedging effectiveness is evaluated each quarter end using the “Dollar Off-Set Method”. Each quarter, changes in the fair values will adjust the balance sheet asset or liability, with an offset to Other Comprehensive Income (“OCI”) for the effective portion of the hedge.

We recognized a loss of approximately $1.5 million in OCI as a result of changes in fair value of our interest rate derivatives during the fiscal year ended September 30, 2012, net of loss realized from hedge ineffectiveness and net of $1.2 million of realized losses associated with effective portion and classified as interest expense, net of capitalized interest on our Consolidated Statement of Operations. A $1.5 million loss was also recognized in OCI during the fiscal year ended September 30, 2011, net of $0.4 million of realized losses associated with effective portion and classified as interest expense, net of capitalized interest on our Consolidated Statement of Operations.

For interest rate swaps, we evaluate all material terms between the swap and the underlying debt obligation. Any change in fair value resulting from ineffectiveness is recognized immediately in earnings. For the fiscal year ended September 30, 2012, we recognized a $0.4 million loss on our condensed consolidated statement of operations due to hedge ineffectiveness and no loss due to hedge ineffectiveness for the fiscal year ended September 30, 2011.