Derivative Financial Instruments

9 Months Ended

Sep. 30, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

(1) Derivative Financial Instruments

From time to time, the Company may employ interest rate swaps in an attempt to achieve a more balanced debt portfolio.  The Company does not use derivative financial instruments for trading or speculative purposes.

In April 2012, the Company entered into an interest rate swap for a notional amount of $100 million related to its fixed rate debt maturing in December 2021. This transaction is designated as a fair value hedge since the swap hedges against the change in fair value of fixed rate debt resulting from changes in interest rates.  The Company recorded a derivative asset of $1.0 million within intangible and other long term assets in the consolidated balance sheet at September 30, 2012.  The change in fair value of the interest rate swap is included in the adjustments to reconcile net income to net cash provided by operating activities in the consolidated statement of cash flows.

The Company had an interest rate swap agreement for a notional amount of $150 million related to its fixed rate debt maturing in June 2014.  This transaction was designated as a fair value hedge since the swap hedged against the change in fair value of fixed rate debt resulting from changes in interest rates.  The Company recorded a derivative asset of $1.9 million within intangible and other long-term assets in the consolidated balance sheet as of December 31, 2011.  In February 2012, the Company sold this interest rate swap to the counterparty for $1.2 million. 

The location and effect of the derivative instrument on the condensed consolidated statement of operations for the three and ninemonths ended September 30,  2012 and 2011, presented on a pre-tax basis, is as follows (in thousands):

		Amount of (gain) loss recognized
	Location of (gain) loss  recognized	Three Months Ended September 30, 2012	Three Months Ended September 30, 2011
Interest rate swap	Interest expense, net	$              (1,079)	$                  350
Hedged item - debt	Interest expense, net	682	(788)
		$                 (397)	$                  (438)
	Location of (gain) loss  recognized	Nine Months Ended September 30, 2012	Nine Months Ended September 30, 2011
Interest rate swap	Interest expense, net	$              (4,235)	$                  230
Hedged item - debt	Interest expense, net	3,196	(1,409)
		$              (1,039)	$               (1,179)

For the nine months ended September 30,  2012 and 2011,  approximately $1.0 million and $1.2 million, respectively, of interest income was related to the ineffectiveness associated with these fair value hedges.  Hedge ineffectiveness represents the difference between the changes in fair value of the derivative instruments and the changes in fair value of the fixed rate debt attributable to changes in the benchmark interest rate.