Derivative Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instrument Detail [Abstract]

Derivative Instruments

NOTE 9.  DERIVATIVE INSTRUMENTS

From time to time, we enter into derivative financial instruments to manage certain cash flow and fair value risks.

Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset or liability to a particular risk, such as interest rate risk, are considered fair value hedges. We have five fair value interest rate swaps with notional amounts totaling $69.3 million associated with $19.3 million of our medium-term notes and $50.0 million of our senior notes. The fair value swaps convert interest payments with fixed rates ranging between 7.50% and 8.89% to a variable rate of 3-month LIBOR plus a spread between 5.84% and 6.29%. Our fair value swaps terminate at various dates between June 2017 and November 2019.

Derivatives designated and qualifying as a hedge of the exposure to variability in the cash flows of a specific asset or liability that is attributable to a particular risk, such as interest rate risk, are considered cash flow hedges. We have one interest rate swap with a notional amount of $27.5 million associated with $27.5 million of term loan debt. The cash flow hedge converts a variable rate of 2.15% plus 3-month LIBOR to a fixed rate of 3.88% and terminates in February 2026. Our cash flow hedge is expected to be highly effective in achieving offsetting cash flows attributable to the hedged interest rate risk through the term of the hedge. Therefore, changes in the fair value of the interest rate swap are recorded as a component of other comprehensive income and will be recognized in earnings when the hedged interest rate affects earnings. Changes in the fair value of the ineffective portion are recognized immediately in earnings. There has been no impact on earnings due to ineffectiveness to date. As of December 31, 2016, the amount of net losses expected to be reclassified into earnings in the next 12 months is $0.2 million.

The fair values of our cash flow and fair value derivative instruments on our Consolidated Balance Sheets as of December 31 are as follows: 

(Dollars in thousands)	Asset Derivatives					Liability Derivatives
Location	2016		2015		Location	2016		2015
Other assets, current	$	32	$	7		$	—	$	—
Other assets, non-current		1,363		574	Long-term debt		91		—
	$	1,395	$	581		$	91	$	—

The following table details the effect of derivatives on our Consolidated Statements of Income:

(Dollars in thousands)	Location	2016			2015		2014
Derivativesdesignatedinfairvaluehedging relationships:
Realized gain on interest rate contracts1	Interestexpense	$	805		$	1,534	$	979
Derivativesdesignatedincashflowhedging relationships:
Gain (loss) recognized in other comprehensive income,    net of tax (effective portion)		$	(916	)	$	—	$	—
Loss reclassified from accumulated other comprehensive    income into interest expense (effective portion)1	Interestexpense		215			—		—
Net effect on other comprehensive income		$	(701	)	$	—	$	—

¹ Realized gains and losses on interest rate contracts consist of net cash received or paid and interest accruals on the interest rate swaps during the periods. Net cash received or paid is included in the supplemental cash flow information within interest, net of amounts capitalized in the Consolidated Statements of Cash Flows.