Derivative Instruments And Hedging Activities

12 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedges, Assets [Abstract]

Derivative Instruments And Hedging Activities

10. Derivative Financial Instruments and Hedging Activities

Risk Management Objective of Using Derivatives. We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we may enter into derivative financial instruments to manage exposures arising from business activities resulting in differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings.

Cash Flow Hedges of Interest Rate Risk. Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps and caps as part of our interest rate risk management strategy. Interest rate swaps involve the receipt of variable rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps involve the receipt of variable rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an upfront premium.

Designated Hedges. In August 2011, our interest rate swap, with a notional amount of $16.6 million, matured and settled. As a result of the settlement, we did not have any designated hedges as of December 31, 2011. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges was recorded through settlement in accumulated other comprehensive income and was subsequently reclassified into earnings in the period the hedged forecasted transaction affected earnings. Through August 2011, this derivative was used to hedge the variable cash flows associated with existing variable rate debt. No portion of designated hedges was ineffective during the years ended December 31, 2011, and 2010. We did not have any designated hedges during the year ended December 31, 2012.

Non-designated Hedges. Derivatives are not entered into for speculative purposes and are used to manage our exposure to interest rate movements and other identified risks. Our non-designated hedges are either specifically non-designated by management or do not meet strict hedge accounting requirements. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings in interest and other income (loss).

In connection with the repayment of a $500 million term loan on June 6, 2011, we discontinued the hedging relationship on a $500 million interest rate swap used as a cash flow hedge as of May 31, 2011. Upon repayment of the loan, which eliminated the probable future variable monthly interest payments that were being hedged, we recognized a non-cash charge of approximately $29.8 million which included the accelerated reclassification of amounts previously recorded in accumulated other comprehensive loss related to this swap. Subsequent changes in the market value of the interest rate swap, which matured in October 2012, were recorded directly in earnings in interest and other income (loss).

As of December 31, 2012, we had an interest rate cap with a notional amount of $175 million, which was not designated as a hedge of interest rate risk.

The table below presents the fair value of our derivative financial instruments as well as their classification in the consolidated balance sheets at December 31 (in millions):

	Fair Values of Derivative Instruments
	Asset Derivatives						Liability Derivatives
	2012			2011			2012			2011
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives not designated as hedging instruments
Interest Rate Swap							Other Liabilities	$	—	Other Liabilities	$	16.6
Interest Rate Cap	Other Assets	$	—	Other Assets	$	0.1

The tables below present the effect of our derivative financial instruments in the consolidated statements of income and comprehensive income for the years ended December 31 (in millions).

Effect of Derivative Instruments
Derivatives in  Cash Flow Hedging Relationships	Unrealized (Loss)  Recognized in Other Comprehensive Income (“OCI”) on Derivative (Effective Portion)								Location of Loss Reclassified from Accumulated OCI  into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Loss Recognized in  Statements of Income (Discontinuation, Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Loss  Recognized in Statements of Income (Discontinuation, Ineffective Portion and Amount Excluded from Effectiveness Testing)
	2012		2011			2010				2012		2011		2010			2012		2011		2010
Interest Rate Swaps (1)	$	—	$	(2.7	)	$	(19.1	)	Interest Expense	$	—	$	9.9	$	23.4	Loss on discontinuation of hedging relationship	$	—	$	29.8	$	—

Derivatives Not Designated as Hedging Instruments	Location of Gain/(Loss) Recognized in Statements of Income	Amount of (Loss) Recognized in Statements of Income
		2012			2011			2010
Interest Rate Cap	Other income/(loss)	$	(0.1	)	$	(0.1	)	$	—
Interest Rate Swap	Other income/(loss)	(0.7		)	(0.2		)	—

(1) The results include the interest rate swap gain (loss) prior to discontinuation in May 2011.