Note 6 - Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 6. Derivative Instruments and Hedging Activities

On September 30, 2016, the Company entered into a floating-to-fixed interest rate swap agreement for an aggregate notional amount of $100.0 million which hedges a portion of the Company’s floating rate indebtedness (the “

Transaction”). The swap transaction is intended to mitigate the Company’s interest rate risk as it provides for the Company to pay a fixed rate of 1.22% per annum plus the applicable margin pursuant to the Credit Facility. Notwithstanding the terms of the interest rate swap transaction, the Company is ultimately obligated for all amounts due and payable under the Credit Facility. The cash flows from the Transaction begin January 31, 2018 and the hedge matures January 31, 2023. The Company has designated the swap as a cash flow hedge. On a quarterly basis, management evaluates the swap to determine effectiveness or ineffectiveness. For the portion of the swap deemed effective, changes in fair value will be recorded as part of accumulated other comprehensive income or loss. For the ineffective portion of the swap, changes in fair value will be recorded within net income. It is currently management’s intent to have the swap remain effective. Realized gains and losses in connection with each required interest payment will be reclassified from accumulated other comprehensive income or loss to interest expense. The Transaction had no effect on the consolidated balance sheet as of September 30, 2016 and the consolidated statement of comprehensive income for the three and nine months ended September 30, 2016.

The Company does not hold or issue derivative financial instruments for trading or speculative purposes.