XML 74 R21.htm IDEA: XBRL DOCUMENT

Fair value measurements

6 Months Ended

Jun. 30, 2014

15. Fair value measurements:

ASC 815, "Derivatives and Hedging" requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position.

The Company recognizes all derivative instruments as either assets or liabilities at fair value on its consolidated balance sheets.

Changes in the fair value of derivative instruments that have not been designated as hedging instruments are reported in the accompanying unaudited interim condensed consolidated statements of operations.

Fair value on a recurring basis

Interest rate swaps

The Company enters into interest rate swap transactions to manage interest costs and risk associated with changing interest rates with respect to its variable interest loans and credit facilities. The Company's interest rate swaps did not qualify for hedge accounting and therefore resulting gains or losses are recognized in the accompanying unaudited interim condensed consolidated statements of operations.

In June 2013, the Company entered into two interest rate swap agreements of $26,840 and $28,628 notional amount, which will be effective by November and August 2014, respectively, and mature in August and November 2018, respectively.

On April 28, 2014, the Company entered into two interest rate swap agreements to fix forward 50% of its floating interest rate liabilities for the $35,000 loan facility with HSH Nordbank AG (see Note 8 a)), which will be in effect by September 30, 2014 and mature in September 2018 respectively. Under the terms of the respective interest rate swap agreements, the Company will be paying on a quarterly basis a fixed rate of 1.765% per annum, while receiving a variable amount equal to the three month U.S. LIBOR rate, both applied on the notional amount of the swaps outstanding at each settlement date.

As of December 31, 2013, the Company had two interest rate swap transactions outstanding, and the Company had four interest rate swap transactions outstanding as of June 30, 2014.

The change in the fair market value of the respective swaps for the six month periods ended June 30, 2013 and 2014 resulted in a gain of $438 and in a loss of $819, respectively and are included in “Gain / (loss) on derivative financial instruments, net” in the accompanying unaudited interim condensed consolidated statement of operations.

	SIx month period ended June 30,

		2013		2014

Gain/ (loss) on interest rate swaps	$	438	$	(819	)
	$	438	$	(819)

The guidance for fair value measurements applies to all assets and liabilities that are being measured and reported on a fair value basis. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

The following table summarizes the valuation of the Company's financial instruments as of December 31, 2013 and June 30, 2014.

	Significant Other Observable Inputs (Level 2)
		December 31, 2013		June 30, 2014
ASSETS

Interest rate swaps - asset position	$	91	$	-
Total	$	91	$	-

LIABILITIES

Interest rate swaps - liability position	$	-	$	728
Total	$	-	$	728

The carrying values of temporary cash investments, restricted cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. The fair value of long-term bank loans and non-current restricted cash balances, bearing interest at variable interest rates, approximate their recorded values as of June 30, 2014.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References+ Details