COMPREHENSIVE LOSS

6 Months Ended

Oct. 31, 2011

COMPREHENSIVE LOSS

COMPREHENSIVE LOSS

9. COMPREHENSIVE LOSS

Comprehensive loss is defined as the change in net assets of a business enterprise during a period from transactions generated from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Accumulated other comprehensive (loss) income included in the accompanying unaudited consolidated balance sheets consists of changes in the fair value of our interest rate derivatives and commodity hedge agreements, marketable securities as well as our portion of the changes in the fair value of US GreenFiber LLC’s (“GreenFiber”) commodity hedge agreements.

Comprehensive loss for the three and six months ended October 31, 2011 and 2010 is as follows:

	Three Months Ended						Six Months Ended
	October 31,						October 31,
	2011			2010			2011			2010
Net loss attributable to common stockholders	$	(765	)	$	(1,154	)	$	(3,826	)	$	(4,056	)
Other comprehensive (loss) income	(424		)	78			(543		)	441
Comprehensive loss	$	(1,189	)	$	(1,076	)	$	(4,369	)	$	(3,615	)

The components of other comprehensive (loss) income for the three and six months ended October 31, 2011 and 2010 are shown as follows:

	Three Months Ended October 31,
	2011								2010
	Gross			Tax effect		Net of Tax			Gross			Tax effect			Net of Tax
Changes in fair value of marketable securities during the period	$	(5	)	$	—	$	(5	)	$	(14	)	$	—		$	(14	)
Change in fair value of interest rate and commodity hedges during the period	(58		)	—		(58		)	(56		)	(148		)	92
Reclassification to earnings for commodity hedge contracts during the period	(361		)	—		(361		)	(65		)	(65		)	—
	$	(424	)	$	—	$	(424	)	$	(135	)	$	(213	)	$	78

	Six Months Ended October 31,
	2011									2010
	Gross			Tax effect			Net of Tax			Gross			Tax effect			Net of Tax
Changes in fair value of marketable securities during the period	$	(11	)	$	—		$	(11	)	$	(20	)	$	—		$	(20	)
Change in fair value of interest rate and commodity hedges during the period	283			(99		)	382			126			(580		)	706
Reclassification to earnings for commodity hedge contracts during the period	(815		)	99			(914		)	(150		)	95			(245		)
	$	(543	)	$	—		$	(543	)	$	(44	)	$	(485	)	$	441

Our strategy to hedge against fluctuations in variable interest rates involves entering into interest rate derivative agreements to hedge against adverse movements in interest rates. In the quarter ended October 31, 2011, we entered into two forward starting interest rate derivative agreements to hedge interest rate risk of a forecasted transaction effective January 15, 2013. The forecasted transaction will be used to redeem our outstanding $180,000 11% senior second lien notes due July 15, 2014 (the “Second Lien Notes”). The forecasted transaction is expected to occur between July 15, 2012 and October 31, 2012 as the Second Lien Notes become callable on July 15, 2012. The total notional amount of these agreements is $150,000 and require us to receive interest based on changes in the London Interbank Offered Rate (“LIBOR”) index and pay interest at a rate of approximately 1.40%. The agreements mature in March 2016, which is when our amended and restated senior secured credit facility (the “2011 Revolver”) becomes due.

For each interest rate derivative deemed to be an effective cash flow hedge, the change in fair value is recorded in our stockholders’ equity as a component of accumulated other comprehensive (loss) income and included in earnings later, at the same time as earnings are effected by the hedged transaction. Differences paid or received over the life of the agreements are recorded as additions to or reductions of interest expense of the underlying debt.

If the interest rate derivatives become ineffective due to the inability to complete the forecasted transaction under the expected terms, the ineffective portion will be included in earnings in the period it was deemed to be ineffective.

Our strategy to hedge against fluctuations in the commodity prices of recycled paper is to enter into hedges to mitigate the variability in cash flows generated from the sales of recycled paper at floating prices, resulting in a fixed price being received from these sales. We evaluate the hedges and ensure that these instruments qualify for hedge accounting pursuant to derivative and hedging guidance. Designated as effective cash flow hedges, the changes in the fair value of these derivatives are recognized in other comprehensive income (loss) until the hedged item is settled and recognized as part of commodity revenue.

If the price per short ton of the underlying commodity, as reported on the Official Board Market, is less than the contract price per short ton, we receive the difference between the average price and the contract price (multiplied by the notional tons) from the respective counter-party. If the price of the commodity exceeds the contract price per short ton, we pay the calculated difference to the counter-party.

The fair values of the commodity hedges are obtained or derived from third-party counter-parties and are determined using valuation models with assumptions about market prices for commodities being based on those in underlying active markets. We are not party to any commodity hedge contracts at October 31, 2011.

We recognize all derivatives on the balance sheet at fair value.