Derivative Instruments

12 Months Ended

Dec. 31, 2011

Derivative Instruments [Abstract]

Derivative Instruments

Note 8—Derivative Instruments

Derivative Instruments - Interest Rate Swap Agreements

We use interest rate swaps to manage the mix of our debt between fixed and variable rate instruments. As of December 31, 2011, we have entered into eight interest rate swap agreements for notional amounts totaling $5,750.0 million. The difference to be paid or received under the terms of the interest rate swap agreements is accrued as interest rates change and recognized as an adjustment to interest expense for the related debt. Changes in the variable interest rates to be paid or received pursuant to the terms of the interest rate swap agreements will have a corresponding effect on future cash flows. The major terms of the interest rate swap agreements as of December 31, 2011 are as follows:

Effective Date	Notional Amount		Fixed  Rate Paid			Variable Rate Received as of Dec. 31, 2011			Next Reset Date	Maturity Date
	(In millions)
April 25, 2011	$	250.0		1.351	%		0.294	%	January 25, 2012	January 25, 2015
April 25, 2011		250.0		1.347	%		0.294	%	January 25, 2012	January 25, 2015
April 25, 2011		250.0		1.350	%		0.294	%	January 25, 2012	January 25, 2015
January 25, 2011		1,000.0		3.233	%		0.418	%	January 25, 2012	January 25, 2015
April 25, 2011		1,000.0		3.315	%		0.418	%	January 25, 2012	January 25, 2015
January 25, 2011		1,000.0		3.915	%		0.418	%	January 25, 2012	January 25, 2015
April 25, 2011		1,000.0		3.385	%		0.418	%	January 25, 2012	January 25, 2015
January 25, 2011		1,000.0		3.935	%		0.418	%	January 25, 2012	January 25, 2015

The variable rate received on our interest rate swap agreements did not materially change as a result of the January 25, 2012 reset.

During the second quarter of 2011, the Company completed transactions to amend and extend certain swap contracts. Prior to the amendment, a $1,000.0 million swap had a fixed payment rate of 4.172% and a maturity date of April 25, 2012. Two $2,000.0 million swaps were split into four $1,000.0 million tranches. The previous terms included fixed payment rates of 4.276% and 4.263% and maturity dates of April 25, 2013. The amended payment rates and maturity dates are shown in the table above.

In December 2011, the Company amended the terms of two $1,000.0 million swap contracts with a corresponding change in the elected interest rate on $2,000.0 million of term loans. Effective January 25, 2012 through January 25, 2014, the variable rate received on the swaps changes from three-month to one-month LIBOR, and the fixed payment rate is reduced by 12 basis points. In connection with the amendment, the Company determined that it was not probable that previously forecasted transactions would occur on all interest rate swaps. Therefore, we removed the cash flow hedging designation for all of our interest rate swap agreements and were required to reclassify $183.2 million of deferred losses recorded in AOCL into interest expense. Prior to removing the cash flow hedging designation, we amortized $51.2 million of deferred losses frozen in AOCL to interest expense for the year ended December 31, 2011. Any future changes in fair value of the swap agreements will be recognized in interest expense during the period in which the changes in value occur. In January 2012, the Company amended the terms of three $1,000.0 million notional value interest rate swap contracts. See Note 22, "Subsequent Events" for more information.

Derivative Instruments - Interest Rate Cap Agreements

In January 2008, we entered into an interest rate cap agreement to partially hedge the risk of future increases in the variable rate of the CMBS Financing. The CMBS interest rate cap agreement, which was effective January 28, 2008 and terminates February 13, 2013, is for a notional amount of $6,500.0 million at a LIBOR cap rate of 4.5%. The interest rate cap was designated as a cash flow hedging instrument for accounting purposes on May 1, 2008.

In 2009, we began purchasing and extinguishing portions of the CMBS Financing. The hedging relationship between the CMBS Financing and the interest rate cap remained effective subsequent to each debt extinguishment. In connection with the extinguishments, we reclassified deferred losses out of AOCL and into interest expense associated with the hedge for which the forecasted future transactions are no longer probable of occurring.

On January 31, 2010, we removed the cash flow hedge designation for the $6,500.0 million interest rate cap, freezing the amount of deferred losses recorded in AOCL associated with the interest rate cap. Beginning February 1, 2010, we began amortizing deferred losses frozen in AOCL into income over the original remaining term of the hedge forecasted transactions that are still probable of occurring. For the year ended December 31, 2011, we recorded $20.9 million as an increase to interest expense, and we will record an additional $20.9 million as an increase to interest expense and AOCL over the next twelve months, all related to deferred losses on the interest rate cap.

On January 31, 2010, we re-designated $4,650.2 million of the interest rate cap as a cash flow hedging instrument for accounting purposes. Any future changes in fair value of the portion of the interest rate cap not designated as a hedging instrument will be recognized in interest expense during the period in which the changes in value occur.

On April 5, 2010, as required under the PHW Las Vegas Amended and Restated Loan Agreement, we entered into an interest rate cap agreement to partially hedge the risk of future increases in the variable rate of the PHW Las Vegas senior secured loan. The interest rate cap agreement was for a notional amount of $554.3 million at a LIBOR cap rate of 5.0% and matured on December 9, 2011. To give proper consideration to the prepayment requirements of the PHW Las Vegas senior secured loan, we designated $525.0 million of the $554.3 million notional amount of the interest rate cap as a cash flow hedging instrument for accounting purposes. On May 1, 2011, we removed the cash flow hedging designation for the interest rate cap agreement. On December 9, 2011, we entered into a new interest rate cap agreement for a notional amount of $517.7 million at a LIBOR cap rate of 7.0% and matures on December 9, 2013. Any change in fair value is recognized in interest expense during the period in which the change in value occurs.

Derivative Instruments – Impact on Financial Statements

The following table represents the fair values of derivative instruments in the Consolidated Balance Sheets as of December 31:

	Asset Derivatives						Liability Derivatives
	2011			2010			2011				2010
(In millions)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest Rate Swaps		$	—		$	—		$	—		Accrued expenses	$	(21.6	)
Interest Rate Swaps			—	Deferred charges and other		11.6			—		Deferred credits and other		(305.5	)
Interest Rate Caps			—	Deferred charges and other		3.7			—				—
Subtotal			—			15.3			—				(327.1	)
Derivatives not designated as hedging instruments
Interest Rate Swaps			—			—	Deferred credits and other		(336.1	)	Deferred credits and other		(32.2	)
Interest Rate Caps			—	Deferred charges and other		1.5			—				—
Subtotal			—			1.5			(336.1	)			(32.2	)
Total Derivatives		$	—		$	16.8		$	(336.1	)		$	(359.3	)

The following table represents the effect of derivative instruments in the Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009 for amounts transferred into or out of AOCL:

(In millions)	Amount of (Gain) or  Loss Recognized in AOCL (Effective Portion)						Location of (Gain) or Loss Reclassified From AOCL Into Net Loss (Effective Portion)		Amount of (Gain) or Loss Reclassified from AOCL into Net Loss (Effective Portion)						Location of (Gain) or Loss Recognized in Net Loss (Ineffective Portion)		Amount of (Gain) or Loss Recognized in Net Loss (Ineffective Portion)
Derivatives designated as hedging instruments	2011		2010		2009				2011		2010		2009				2011			2010			2009
Interest Rate Contracts	$	64.3	$	99.2	$	20.9		Interest Expense	$	265.7	$	36.3	$	15.1		Interest Expense	$	(53.4	)	$	(76.6	)	$	(7.6	)

(In millions)	Location of (Gain) or Loss Recognized in Net Loss	Amount of (Gain) or  Loss Recognized in Net Loss
Derivatives not designated as hedging instruments		2011			2010		2009
Interest Rate Contracts	Interest Expense	$	(16.9	)	$	1.9	$	(7.6	)

In addition to the impact on interest expense from amounts reclassified from AOCL, the difference to be paid or received under the terms of the interest rate swap agreements is recognized as interest expense and is paid quarterly. This cash settlement portion of the interest rate swap agreements increased interest expense for the years ended December 31, 2011, 2010 and 2009 by approximately $201.1 million, $265.8 million and $214.2 million, respectively.

At December 31, 2011, our variable-rate debt, excluding $5,750.0 million of variable-rate debt hedged using interest rate swap agreements, represents 35% of our total debt, while our fixed-rate debt is 65% of our total debt.