Derivative Instrument and Hedging Activity

9 Months Ended

Sep. 30, 2014

Text Block [Abstract]

Derivative Instrument and Hedging Activity

8. Derivative Instrument and Hedging Activity

On January 4, 2007, in connection with a promissory note issued for the acquisition of a building, we entered into a ten-year interest rate swap agreement for the original notional principal amount of $7.7 million whereby we will pay a fixed interest rate of 6.31%, as compared to interest at a floating rate equal to one-month LIBOR plus 125 basis points. The interest rate swap amortization schedule is identical to the promissory note amortization schedule, which has an effective date of January 4, 2007, monthly notional reductions and an expiration date of January 4, 2017.

Our interest rate swap is governed by a master netting arrangement, which is required to be disclosed as a balance sheet offsetting item as follows (in thousands):

As of September 30, 2014

Gross amounts not offset in

the  balance sheet

Gross amounts of

Gross amounts

Net amounts of

Cash

recognized

offset in the

liabilities presented

Financial

collateral

Description

liabilities

balance sheet

in the balance sheet

Instruments

received

Net amount

Interest rate swap

$

456

—

456

456

—

—

As of December 31, 2013

Gross amounts not offset in

the  balance sheet

Gross amounts of

Gross amounts

Net amounts of

Cash

recognized

offset in the

liabilities presented

Financial

collateral

Description

liabilities

balance sheet

in the balance sheet

Instruments

received

Net amount

Interest rate swap

$

602

—

602

602

—

—