Derivatives

6 Months Ended

Jun. 30, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives

9. Derivatives

Starting in 2015, the Company uses interest rate swaps to hedge variable interest payments due on its syndicated term loans. These swaps allow the Company to pay at fixed interest rates and receive payments based on variable interest rates with the swap counterparty based on the three month LIBOR on the notional amounts over the life of the swaps. The Company did not use interest rate swaps prior to 2015.

In January 2015, the Company purchased interest rate swaps with a notional amount aggregating $109.1 million. The interest rate swap contracts were executed with four counterparties who were part of the lender group on the Company’s syndicated term loans. As of June 30, 2015 the unrealized fair market value gain (loss) on the interest rate swaps were $2.3 million as included in other assets in the consolidated balance sheet.

The interest rate swaps have been designated as cash flow hedges. In the six months ended June 30, 2015, the hedge relationships on the Company’s interest rate swaps have been assessed as highly effective as the critical terms of the interest rate swaps match the critical terms of the underlying forecasted hedged transactions. Accordingly, changes in the fair value of these derivatives are recorded as a component of accumulated other comprehensive income, net of a provision for income taxes. Changes in the fair value of these derivatives are subsequently reclassified into earnings in the period that the hedged forecasted transactions affects earnings. For the three and six months ended June 30, 2015, the Company recorded an unrealized gain of $2.9 million and $1.1 million, respectively, net of the applicable tax expense of $0.9 million and $0.9 million, respectively. There were no undesignated derivative instruments recorded by the Company as of June 30, 2015. At June 30, 2015, the Company had the following designated derivative instruments classified as derivative assets (in thousands, other than quantity and interest rates):

Gain

Adjusted

recognized in

Gain

Hedge

Fair

Credit

Fair

Deferred

Accumulated

Recognized

Maturity

Interest

Notional

Market

Risk

Market

Tax

Comprehensive

into

Type

Quantity

Dates

Rates

Amount

Value

Adjustment

Value

Expense

Income

Earnings

Interest rate swaps

4

10/31/2028

2.17%-2.18%

$

109,143

$

3,040

$

(711

)

$

2,329

$

904

$

1,425

$

356