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Interest Rate Swap Agreements
 3 Months Ended
Mar. 31, 2015
Interest Rate Swap Agreements

9. Interest Rate Swap Agreements

The Company is currently a party to three interest rate swap agreements that are used to hedge interest rate risk associated with the variable interest rates on the Company’s term loan debt and qualify for cash flow hedge accounting. The fair values of the interest rate swaps are recorded on the Company’s condensed consolidated balance sheet as an asset or liability with the effective portion of the interest rate swaps’ gains or losses reported as a component of accumulated other comprehensive loss and the ineffective portion reported in earnings. The changes in fair values are reclassified from accumulated other comprehensive loss into earnings in the same period that the hedged items affect earnings.

The valuation technique used to determine fair value is the income approach and under this approach, the Company uses projected future interest rates as provided by counterparties to the interest rate swap agreements and the fixed rates that the Company is obligated to pay under these agreements. Therefore, the Company’s measurements use significant unobservable inputs, which fall in Level 3 of the U.S. GAAP hierarchy as defined by FASB ASC Topic 820-10-35. There were no changes in valuation techniques during the period and no transfers in or out of Level 3. See Note 12 for a summary of unrealized gains or losses recorded in accumulated other comprehensive loss and earnings.

Below is a summary of the Company’s current interest rate swap agreements designated as cash flow hedges as of March 31, 2015:

 

                                        Estimated  
Nominal
Amount		   

Effective Date

    Pay Rate    

Receive Rate

   

Expiration

Date

    Current
Liability (1)		      Long-
Term
Liability (2)		      Total Fair
Value at
March 31,
2015		  
$175,000    December 2010      1.3975 %    1-Month LIBOR    September 2015    $ 961       $ —         $ 961   
$175,000    December 2010      1.4000 %    1-Month LIBOR    September 2015      970       $ —           970   
$100,000    November 2011      1.7150 %    1-Month LIBOR    April 2016      1,340         91         1,431   

 

              

 

 

     

 

 

     

 

 

  
$450,000 $ 3,271    $ 91    $ 3,362   

 

              

 

 

     

 

 

     

 

 

  

 

(1)  Included in accounts payable and accrued expenses on the condensed consolidated balance sheet as of March 31, 2015.
(2)  Included in other long-term liabilities on the condensed consolidated balance sheet as of March 31, 2015.

The changes in accumulated other comprehensive loss, net of taxes, related to the Company’s interest rate swap agreements for the three months ended March 31, 2015 and 2014 were as follows:

 

     Interest Rate Swaps  
     2015      2014  

Beginning balances – January 1

    $ (2,870 )     $ (5,716 ) 
  

 

 

     

 

 

  

Other comprehensive loss before reclassifications, net of taxes

   (689 )    (979 ) 

Amounts reclassified from accumulated other comprehensive loss to interest expense, net of taxes

   1,446      1,476   
  

 

 

     

 

 

  

Net other comprehensive income

   757      497   
  

 

 

     

 

 

  

Ending balances – March 31

 $ (2,113 )  $ (5,219 )