Derivative instruments and Hedges Activities

9 Months Ended

Sep. 30, 2017

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative instruments and Hedges Activities

NOTE 7 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

On August 31, 2017, the Company entered into a floating-to-fixed interest rate swap agreement for an aggregate notional amount of $25.0 million which hedges a portion of the Company’s floating rate indebtedness (the “Transaction”). The entry into a swap is intended to mitigate the Company’s interest rate risk as it provides for the Company to pay a fixed rate of 1.8475% 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 August 31, 2018 and the swap matures August 31, 2023. The Company has designated the swap as a cash flow hedge. On a quarterly basis, management evaluates the swap to determine its 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. Management intends that the swap remain effective. Realized gains and losses in connection with each required interest payment will be reclassified from AOCI to interest expense.

The Company may enter into additional swap transactions in the future but does not hold or issue derivative financial instruments for trading or speculative purposes.