Quarterly report pursuant to sections 13 or 15(d)

DERIVATIVE INSTRUMENTS (Tables)

v2.4.0.6
DERIVATIVE INSTRUMENTS (Tables)
9 Months Ended
Sep. 30, 2012
DERIVATIVE INSTRUMENTS [Abstract]  
Realized and Unrealized Gains on Derivatives
The following tables detail (in thousands) the impact the agreements had on the financial statements:

 
Three Months Ended
September 30,
 
 
Nine Months Ended
September 30,
 
 
2012
 
 
2011
 
 
2012
 
 
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain (loss)
 
$
1,446
 
 
$
(307
)
 
$
(837
)
 
$
(388
)
Realized gain (loss)
 
 
(1,446
)
 
 
(86
)
 
 
(942
)
 
 
279
 
Net loss
 
$
--
 
 
$
(393
)
 
$
(1,779
)
 
$
(109
)

Fair Value Derivative Assets

 
September 30, 2012
 
 
December 31, 2011
 
 
 
 
 
 
 
Fair value of financial contracts – asset (liability)
 
$
(444
)
 
$
393
 

Impact of Interest Rate Swap on Other Comprehensive Loss
On March 21, 2008, we entered into a pay-fixed, receive-variable interest rate swap agreement with Bank of America related to $10.0 million of our $14 million term loan secured by plant, pipeline and equipment. The effective date of the interest rate swap agreement is August 15, 2008, and terminates on December 15, 2017.  The notional amount of the interest rate swap was $6,000,000 at September 30, 2012.  South Hampton receives credit for payments of variable interest made on the term loan's variable rates, which are based upon the London InterBank Offered Rate (LIBOR), and pays Bank of America an interest rate of 5.83% less the credit on the interest rate swap.  We have designated the transaction as a cash flow hedge.  Beginning on August 15, 2008, the derivative instrument was reported at fair value with any changes in fair value reported within the Company's Statement of Comprehensive Income.  The Company entered into the interest rate swap to minimize the effect of changes in the LIBOR rate.  The following tables detail (in thousands) the impact the agreement had on the financial statements:
 
 
September 30,
 
 
2012
 
 
2011
 
Other Comprehensive Loss
 
 
 
 
 
 
Cumulative loss
 
$
(978
)
 
$
(1,130
)
Deferred tax benefit
 
 
333
 
 
 
384
 
Net cumulative loss
 
$
(645
)
 
$
(746
)
 
 
 
 
 
 
 
 
Interest expense reclassified from other comprehensive loss
 
$
275
 
 
$
316
 

Fair Value Derivative Liabilities

 
September 30, 2012
 
 
December 31, 2011
 
 
 
 
 
 
 
Fair value of interest rate swap  - liability
 
$
978
 
 
$
1,134