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Derivative Instruments | 6 Months Ended
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Jun. 30, 2011
Derivative Instruments |
Derivative Instruments |
11. | Derivative Instruments
The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. The type of cash flow hedges the Company enters into includes foreign currency contracts and interest rate exchange agreements that effectively convert a portion of floating-rate debt to fixed-rate debt and are designed to reduce the impact of interest rate changes on future interest expense. The effective portion of gains or losses on interest rate exchange agreements is reported in accumulated other comprehensive income (loss) in shareholders' equity and reclassified into net income in the same period or periods in which the hedged transaction affects net income. The remaining gain or loss in excess of the cumulative change in the present value of future cash flows or the hedged item, if any, is recognized into net income during the period of change. Fair values relating to derivative financial instruments reflect the estimated amounts that the Company would receive or pay to sell or buy the contracts based on quoted market prices of comparable contracts at each balance sheet date. At June 30, 2011, the Company had one interest rate exchange agreement. The interest rate exchange agreement, expiring in December 2011, with a current notional amount of $82.0 million, effectively converted $100.0 million of floating-rate debt into fixed-rate debt at an interest rate of 4.00%. The fixed rate consists of the fixed rate on the interest rate exchange agreements and the Company's current margin of 80 basis points on the Term Loan. Approximately $4.7 million of the gross amount included in accumulated other comprehensive income (loss) in shareholders' equity at June 30, 2011 will be recognized to net income over the next 12 months as the underlying hedged transactions are realized. The $4.7 million is comprised of $1.2 million from the interest rate agreement and $3.5 million from the forward starting interest rate contract settled in December 2010 (see Note 10). On May 31, 2011, the Company settled foreign currency exchange contracts with an aggregate notional amount of $0.5 million; the impact of this settlement was immaterial. The following table sets forth the fair value amounts of derivative instruments held by the Company as of June 30, 2011 and December 31, 2010:
|  | Fair Value Assets (Liabilities) |  |  |
|  | June 30, 2011 |  |  | December 31, 2010 |  |  | Balance Sheet Caption
|  | (In thousands) |  |  |
Interest rate agreements |  | $ | (1,161 | ) |  | $ | (2,328 | ) |  | Accrued expenses
Foreign exchange contracts |  |  | — |  |  |  | 176 |  |  | Other current assets
The following table summarizes the gain (loss) recognized and the amounts and location of income (expense) and gain (loss) reclassified into income for interest rate contracts and foreign currency contracts for June 30, 2011 and 2010:
|  |  |  |  |  |  |  | Expense |  |  |
|  | Gain (Loss) Recognized in |  |  | and Gain |  |  |
|  | Other Comprehensive |  |  | Reclassified into |  |  |
|  | Income |  |  | Income |  |  |
|  | Three Months Ended June 30, |  |  | Income
|  | 2011 |  |  | 2010 |  |  | 2011 |  |  | 2010 |  |  | Statement Caption
|  | (In thousands)
Interest rate agreements |  | $ | 956 |  |  | $ | (26,871 | ) |  | $ | (1,518 | ) |  | $ | (2,279 | ) |  | Interest expense
Foreign exchange contracts |  |  | — |  |  |  | 2 |  |  |  | 107 |  |  |  | — |  |  | Sales
|  | Gain (Loss) Recognized in |  |  | Expense |  |  |
|  | Other |  |  | and Gain |  |  |
|  | Comprehensive |  |  | Reclassified into |  |  |
|  | Income |  |  | Income |  |  |
|  | Six Months Ended June 30, |  |  | Income
|  | 2011 |  |  | 2010 |  |  | 2011 |  |  | 2010 |  |  | Statement Caption
|  | (In thousands)
Interest rate agreements |  | $ | 1,911 |  |  | $ | (26,755 | ) |  | $ | (3,078 | ) |  | $ | (4,605 | ) |  | Interest expense
Foreign exchange contracts |  |  | (55 | ) |  |  | 2 |  |  |  | 227 |  |  |  | — |  |  | Sales

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- Definition This element can be used to disclose the entity's entire derivative instruments and hedging activities disclosure as a single block of text. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising there from, and the amounts of and methodologies and assumptions used in determining the amounts of such items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 45 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44 + Details
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