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INTEREST RATE SWAP AGREEMENTS | 6 Months Ended
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Jun. 30, 2013
INTEREST RATE SWAP AGREEMENTS |
INTEREST RATE SWAP AGREEMENTS | 11 - INTEREST RATE SWAP AGREEMENTS As of June 30, 2013 and December 31, 2012, the Company had four and five interest rate swap agreements outstanding, respectively, with DnB 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 June 30, 2013 and December 31, 2012 was $306,233 and $356,233, 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 June 30, 2013 and December 31, 2012:
|  |  |  |  |  |  |  | June 30, 2013 |  | December 31, 2012 |
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 |
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 |
|  |  |  |  |  |  |  | $ | 306,233 |  | $ | 356,233 |
The following table summarizes the derivative asset and liability balances at June 30, 2013 and December 31, 2012:
|  | Asset Derivatives |  | Liability Derivatives |
|  | Balance |  | Fair Value |  | Balance |  | Fair Value |
|  | Sheet Location |  | June 30, 2013 |  | December 31, 2012 |  | Sheet Location |  | June 30, 2013 |  | December 31, 2012 |
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | Fair value of derivative instruments (Current Assets) |  | $ | — |  | $ | — |  | Fair value of derivative instruments (Current Liabilities) |  | $ | 11,370 |  | $ | 7 |
Interest rate contracts |  | Fair value of derivative instruments (Noncurrent Assets) |  | — |  | — |  | Fair value of derivative instruments (Noncurrent Liabilities) |  | — |  | 16,045 |
Total derivatives designated as hedging instruments |  |  |  | — |  | — |  |  |  | 11,370 |  | 16,052 |
Total Derivatives |  |  |  | $ | — |  | $ | — |  |  |  | $ | 11,370 |  | $ | 16,052 |
As of June 30, 2013, the Company believes it is probable that the Company will not be in compliance with certain covenants under its credit facilities at measurement dates within the next twelve months. If such a default occurs, the Company may also be in default under the terms of the interest rate swap agreements. Accordingly, one swap previously classified as a long-term liability was classified as a current liability in the condensed consolidated balance sheet beginning March 31, 2013 and remained classified as a current liability as of June 30, 2013. 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 June 30, 2013
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 |  | 2013 |  | Portion) |  | 2013 |  | Portion) |  | 2013 |
Interest rate contracts |  | $ | (91 | ) | Interest Expense |  | $ | (2,477 | ) | Other Income (Expense) |  | $ | (2 | )
The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations For the Three-Month Period Ended June 30, 2012
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 |  | 2012 |  | Portion) |  | 2012 |  | Portion) |  | 2012 |
Interest rate contracts |  | $ | (786 | ) | Interest Expense |  | $ | (2,902 | ) | Other Income (Expense) |  | $ | 19 |
The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations For the Six-Month Period Ended June 30, 2013
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 |  | 2013 |  | Portion) |  | 2013 |  | Portion) |  | 2013 |
Interest rate contracts |  | $ | (229 | ) | Interest Expense |  | $ | (4,916 | ) | Other Income (Expense) |  | $ | (5 | )
The Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations For the Six-Month Period Ended June 30, 2012
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 |  | 2012 |  | Portion) |  | 2012 |  | Portion) |  | 2012 |
Interest rate contracts |  | $ | (2,564 | ) | Interest Expense |  | $ | (7,433 | ) | Other Income (Expense) |  | $ | 46 |
At June 30, 2013, ($7,253) 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 June 30, 2013, 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. 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