Derivative Instrument. In February 2004, the Company entered into an interest rate swap arrangement to convert a portion of the fixed rate exposure on its Senior Subordinated Notes to variable rates. Under the terms of the interest rate swap contract, which has a notional amount of $50,000, the Company receives interest at a fixed rate of 91/4% and pays interest at a variable rate equal to LIBOR plus a spread of 442 basis points. The six-month LIBOR rate on each semi-annual reset date determines the variable portion of the interest rate swap. The six-month LIBOR rate for each semi-annual reset date is determined in arrears. The Company has designated the interest rate swap as a fair value hedge of its fixed rate debt. The terms of the interest rate swap contract and hedged item meet the criteria to be measured using the short-cut method defined in SFAS No. 133 and therefore perfect effectiveness is assumed over the term of the swap. In accordance with SFAS No. 133, the Company records a fair value adjustment to the portion of its fixed rate long-term debt that is hedged. A fair value adjustment of $296 at December 31, 2007 was recorded as an increase to long-term obligations, with the related value for the interest rate swap’s non-current portion recorded in other long- 53 Table of Contents term assets. A fair value adjustment of $1,668 at December 31, 2006 was recorded as a decrease to long-term obligations, with the related value for the interest rate swap’s non-current portion recorded in other long-term liabilities. Interest rate differentials associated with the interest rate swap are recorded as an adjustment to interest expense over the life of the interest rate swap. The Company realized an increase in its interest expense as a result of the interest rate swap of $115 for the year ended December 31, 2007 and a increase of $360 for the year ended December 31, 2006.
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Derivative Instrument. In February 2004, the Company entered into an interest rate swap arrangement to convert a portion of the fixed rate exposure on its Senior Subordinated Notes to variable rates. Under the terms of the interest rate swap contract, which has a notional amount of $50,000, the Company receives interest at a fixed rate of 91/4% and pays interest at a variable rate equal to LIBOR plus a spread of 442 basis points. The six-month LIBOR rate on each semi-annual reset date determines the variable portion of the interest rate swap. The six-month LIBOR rate for each semi-annual reset date is determined in arrears. The Company has designated the interest rate swap as a fair value hedge of its fixed rate debt. The terms of the interest rate swap contract and hedged item meet the criteria to be measured using the short-cut method defined in SFAS No. 133 and therefore perfect effectiveness is assumed over the term of the swap. In accordance with SFAS No. 133, the Company records a fair value adjustment to the portion of its fixed rate long-term debt that is hedged. A fair value adjustment of $296 2,991 at December 31, 2007 2008 was recorded as an increase to long-term obligations, with the related value for the interest rate swap’s non-current portion recorded in other long- 53 Table of Contents long-term assets. A fair value adjustment of $1,668 296 at December 31, 2006 2007 was recorded as a decrease to long-term obligations, with the related value for the interest rate swap’s non-current portion recorded in other long-term liabilities. Interest rate differentials associated with the interest rate swap are recorded as an adjustment to interest expense over the life of the interest rate swap. The Company realized an increase decrease in its interest expense as a result of the interest rate swap of $1,355 for the year ended December 31, 2008 and a increase of $115 for the year ended December 31, 2007 and a increase 2007. The swap arrangement was terminated on February 1, 2009 by the counter party pursuant to terms of the arrangement. A $360 for 3,000 payment was received by the year ended December 31, 2006Company.
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