Quarterly report pursuant to sections 13 or 15(d)

Derivative Financial Instruments

v2.3.0.11
Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2012
Derivative Financial Instruments [Abstract]  
Derivative Financial Instruments
6. Derivative Financial Instruments

The Company uses derivative instruments to manage interest rate risk and has designated an interest rate swap as a cash flow hedge of interest expense related to variable-rate long-term debt. To the extent this hedging relationship is effective, changes in the fair value of the interest rate swap are recorded in the Accumulated Other Comprehensive Loss (“AOCL”). Amounts are reclassified from AOCL to interest expense in the period when the hedged forecasted transaction affects earnings. The Company’s single interest rate swap outstanding as of March 31, 2012 and December 31, 2011 has a notional value of $14.9 million and a maturity date of June 2014.

The following table presents the fair value of the Company’s derivative instruments (in thousands):

 

                         

Description

   Balance Sheet Location     March 31,
2012		     December 31,
2011		  

Interest rate swap

     Derivative liabilities     $ 256     $ 258  
           

 

 

    

 

 

  

 

The following table presents the pretax impact that changes in the fair values of derivatives designated as hedging instruments had on AOCL and earnings during the quarter ended March 31, 2012 (in thousands):

 

                         

Description

   Gain Recognized
in OCL		     Location of Gain
Reclassified from
AOCL into Income
(Effective Portion)		     Gain (Loss)
Reclassified from
AOCL into Income
(Effective Portion)		  

Interest rate swap

   $ 2       Interest expense     $ —    
   

 

 

    

 

 

    

 

 

  

Total

   $ 2             $ —    
   

 

 

    

 

 

    

 

 

  

The following tables present the methods used to establish fair value measurements for each of the derivatives (in thousands):

 

                         
    March 31, 2012  
    Fair Value Measurements at Reporting Date Using  

Description

   Quoted Prices in
Active Markets for
Identical Liabilities
(Level 1)		     Significant
Other
Observable
Inputs
(Level 2)		     Significant
Unobservable
Inputs
(Level 3)		  

Interest rate swap liability

     —       $ 256       —    
   

 

 

    

 

 

    

 

 

  

 

                         
    December 31, 2011  
    Fair Value Measurements at Reporting Date Using  

Description

   Quoted Prices in
Active Markets for
Identical Liabilities
(Level 1)		     Significant
Other
Observable
Inputs
(Level 2)		     Significant
Unobservable
Inputs
(Level 3)		  

Interest rate swap liability

     —       $ 258       —