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INTEREST RATE SWAP AGREEMENTS | 9 Months Ended
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Sep. 30, 2011
INTEREST RATE SWAP AGREEMENTS |
INTEREST RATE SWAP AGREEMENTS |
11 - INTEREST RATE SWAP AGREEMENTS As of September 30, 2011 and December 31, 2010, the Company had nine and ten interest rate swap agreements outstanding, respectively, with DnB NOR Bank ASA to manage interest costs and the risk associated with changing interest rates related to the Company’s 2007 Credit Facility. The total notional principal amount of the swaps at September 30, 2011 and December 31, 2010 was $706,233 and $756,233, respectively, and the swaps have specified rates and durations. The following table summarizes the interest rate swaps designated as cash flow hedges that were in place as of September 30, 2011 and December 31, 2010:
|  |  |  |  |  |  |  | September 30, 2011 |  | December 31, 2010 |
Interest Rate Swap Detail |  | Notional |  | Notional |
Trade |  | Fixed |  | Start Date |  | End date |  | Amount |  | Amount |
Date |  | Rate |  | of Swap |  | of Swap |  | Outstanding |  | Outstanding |
9/6/05 |  | 4.485 | % | 9/14/05 |  | 7/29/15 |  | $ | 106,233 |  | $ | 106,233 |
3/29/06 |  | 5.25 | % | 1/2/07 |  | 1/1/14 |  | 50,000 |  | 50,000 |
3/24/06 |  | 5.075 | % | 1/2/08 |  | 1/2/13 |  | 50,000 |  | 50,000 |
7/31/07 |  | 5.115 | % | 11/30/07 |  | 11/30/11 |  | 100,000 |  | 100,000 |
8/9/07 |  | 5.07 | % | 1/2/08 |  | 1/3/12 |  | 100,000 |  | 100,000 |
8/16/07 |  | 4.985 | % | 3/31/08 |  | 3/31/12 |  | 50,000 |  | 50,000 |
8/16/07 |  | 5.04 | % | 3/31/08 |  | 3/31/12 |  | 100,000 |  | 100,000 |
1/22/08 |  | 2.89 | % | 2/1/08 |  | 2/1/11 |  | — |  | 50,000 |
1/9/09 |  | 2.05 | % | 1/22/09 |  | 1/22/14 |  | 100,000 |  | 100,000 |
2/11/09 |  | 2.45 | % | 2/23/09 |  | 2/23/14 |  | 50,000 |  | 50,000 |
|  |  |  |  |  |  |  | $ | 706,233 |  | $ | 756,233 |
The following table summarizes the derivative asset and liability balances at September 30, 2011 and December 31, 2010:
|  | Asset Derivatives |  | Liability Derivatives |
|  | Balance |  | Fair Value |  | Balance |  | Fair Value |
|  | Sheet Location |  | September 30, 2011 |  | December 31, 2010 |  | Sheet Location |  | September 30, 2011 |  | December 31, 2010 |
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | Fair value of derivative instruments (Current Assets) |  | $ | — |  | $ | — |  | Fair value of derivative instruments (Current Liabilities) |  | $ | 5,475 |  | $ | 4,417 |
Interest rate contracts |  | Fair value of derivative instruments (Noncurrent Assets) |  | — |  | — |  | Fair value of derivative instruments (Noncurrent Liabilities) |  | 27,452 |  | 38,880 |
Total derivatives designated as hedging instruments |  |  |  | — |  | — |  |  |  | 32,927 |  | 43,297 |
Total Derivatives |  |  |  | $ | — |  | $ | — |  |  |  | $ | 32,927 |  | $ | 43,297 |
The following tables present the impact of derivative instruments and their location within the Condensed Consolidated Statement of Operations: The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations For the Three Month Period Ended September 30, 2011
Derivatives in Cash Flow Hedging |  | Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) |  | Location of Gain (Loss) Reclassified from AOCI into income (Effective |  | Amount of Gain (Loss) Reclassified from AOCI into income (Effective Portion) |  | Location of Gain (Loss) Recognized in Income on Derivative (Ineffective |  | Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) |
Relationships |  | 2011 |  | Portion) |  | 2011 |  | Portion) |  | 2011 |
Interest rate contracts |  | $ | (5,021 | ) | Interest Expense |  | $ | (7,438 | ) | Other Income (Expense) |  | $ | 18 |
The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations For the Three Month Period Ended September 30, 2010
Derivatives in Cash Flow Hedging |  | Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) |  | Location of Gain (Loss) Reclassified from AOCI into income (Effective |  | Amount of Gain (Loss) Reclassified from AOCI into income (Effective Portion) |  | Location of Gain (Loss) Recognized in Income on Derivative (Ineffective |  | Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) |
Relationships |  | 2010 |  | Portion) |  | 2010 |  | Portion) |  | 2010 |
Interest rate contracts |  | $ | (10,919 | ) | Interest Expense |  | $ | (7,334 | ) | Other Income (Expense) |  | $ | 8 |
The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations For the Nine Month Period Ended September 30, 2011
Derivatives in Cash Flow Hedging |  | Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) |  | Location of Gain (Loss) Reclassified from AOCI into income (Effective |  | Amount of Gain (Loss) Reclassified from AOCI into income (Effective Portion) |  | Location of Gain (Loss) Recognized in Income on Derivative (Ineffective |  | Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) |
Relationships |  | 2011 |  | Portion) |  | 2011 |  | Portion) |  | 2011 |
Interest rate contracts |  | $ | (11,705 | ) | Interest Expense |  | $ | (22,038 | ) | Other Income (Expense) |  | $ | 38 |
The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations For the Nine Month Period Ended September 30, 2010
Derivatives in Cash Flow Hedging |  | Amount of Gain (Loss) Recognized in AOCI on Derivative (Effective Portion) |  | Location of Gain (Loss) Reclassified from AOCI into income (Effective |  | Amount of Gain (Loss) Reclassified from AOCI into income (Effective Portion) |  | Location of Gain (Loss) Recognized in Income on Derivative (Ineffective |  | Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) |
Relationships |  | 2010 |  | Portion) |  | 2010 |  | Portion) |  | 2010 |
Interest rate contracts |  | $ | (34,912 | ) | Interest Expense |  | $ | (22,538 | ) | Other Income (Expense) |  | $ | 41 |
At September 30, 2011, ($16,750) of AOCI is expected to be reclassified into interest expense over the next 12 months associated with interest rate derivatives. The Company is required to provide collateral in the form of vessel assets to support the interest rate swap agreements, excluding vessel assets of Baltic Trading. At September 30, 2011, the Company’s 35 vessels mortgaged under the 2007 Credit Facility served as collateral in the aggregate amount of $100,000.

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- Definition The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, 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 44 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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