Derivative Instruments

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

The Company’s objective in using derivative instruments is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as a primary part of its cash flow hedging strategy. The Company’s interest rate swaps utilized as cash flow hedges involve the receipt of variable–rate payments in exchange for fixed–rate payments over the life of the agreements without exchange of the underlying notional amount. The Company does not use derivative financial instruments for trading or speculative purposes. The Company carries derivative instruments on the Consolidated Balance Sheets at fair value, which incorporates adjustments for the nonperformance risk of the Company and the counterparties.

The fair value of derivative financial instruments held by the Company, exclusive of any accrued interest, as well as their classification on the Consolidated Balance Sheets is presented below (amounts in thousands):

	Balance sheet classification	Fair value at December 31,
		2015		2014
Derivatives designated as hedging instruments:
Interest rate swap	Other accrued liabilities	$	—	$	4,149
Interest rate swaps	Interest rate swaps and other  long–term liabilities	8,334		6,105

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges of forecasted interest payments, the Company reports the effective portion of the gain or loss as a component of other comprehensive income (loss) until the interest payments being hedged are recorded as interest expense, at which time the amounts in other comprehensive income (loss) are reclassified as an adjustment to interest expense. Gains or losses on any ineffective portion of derivative instruments in cash flow hedging relationships are recorded in the period in which they occur as a component of change in fair value of derivative instruments in the Consolidated Statements of Operations.

At December 31, 2015, the Company had one interest rate swap which had a fair value other than zero at the time it was designated, resulting in ineffectiveness. The Company designated the full notional amount of the interest rate swap as a cash flow hedge of interest rate risk. Under the terms of the interest rate swap agreement, the Company pays a fixed rate of 1.77% and receives a variable rate based on one-month LIBOR (subject to a minimum of 1.00%). At December 31, 2015, the interest rate swap effectively converted $920 million of the Company’s variable interest rate debt to a fixed rate of approximately 5.02%.

At December 31, 2015, the Company had not posted any collateral related to its interest rate swap agreement; however, the Company’s obligations under the interest rate swap are subject to the security and guarantee arrangements applicable to the related credit agreement. The interest rate swap agreement contains cross-default provisions under which the Company could be declared in default on its obligations under the agreement if certain conditions of default exist on the Credit Facility. At December 31, 2015, the termination value of the interest rate swap, including accrued interest, was a net liability of $9.0 million. Had the Company been in breach of the provisions of the interest rate swap agreement, it could have been required to pay the termination value to settle the obligation.

Information about gains (losses) on derivative financial instruments held by the Company and their location within the consolidated financial statements is presented below (amounts in thousands):

Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) on Derivatives Recognized in Other Comprehensive Income (Effective Portion)								Location of Loss Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)
	Year Ended December 31,									Year Ended December 31,
	2015			2014			2013			2015			2014			2013
Interest rate swaps	$	(6,851	)	$	(7,999	)	$	772	Interest expense, net	$	(8,548	)	$	(12,896	)	$	(13,133	)

Derivatives in Cash Flow Hedging Relationships	Location of Loss on Derivatives Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Loss on Derivatives Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
		Year Ended December 31,
		2015			2014			2013
Interest rate swaps	Change in fair value of derivative instruments	$	(1	)	$	(90	)	$	(87	)

Losses reclassified from accumulated other comprehensive loss into interest expense, net included deferred losses related to discontinued cash flow hedging relationships that were being amortized as an increase to interest expense as the previously hedged interest payments continued to occur. These deferred losses became fully amortized in June 2015.

Approximately $4.9 million of deferred losses included in accumulated other comprehensive loss on the Company’s Consolidated Balance Sheet at December 31, 2015 is expected to be reclassified into earnings during the next twelve months.

Non-Designated Hedges

From time to time the Company holds interest rate swaps that are not designated as hedges. Such non-designated interest rate swaps are not speculative and are used to manage the Company’s exposure to interest rate movements, but do not meet the hedge accounting requirements. The Company records changes in the fair value of any interest rate swaps not designated in hedging relationships in the period in which they occur as a component of change in fair value of derivative instruments in the Consolidated Statements of Operations. Prior to March 2013, a portion of one of the Company’s interest rate swaps was not designated in a hedging relationship and accordingly, the Company recorded a loss of $0.2 million related to the change in fair value of this non-designated hedge to change in fair value of derivative instruments in the Consolidated Statements of Operations. At December 31, 2015, 2014 and 2013, all of the Company’s interest rate swaps were designated as cash flow hedges.