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Derivatives and Hedging Activities
 9 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities DERIVATIVES AND HEDGING ACTIVITIES
Cash Flow Hedges of Interest Rate Risk
Our purpose for using interest rate derivatives is to add stability to interest expense and to manage our exposure to interest rate movements. During the nine months ended September 30, 2024, we used interest rate swaps to hedge the variable cash flows associated with existing variable-rate debt. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. We do not use derivatives for trading or speculative purposes and we currently do not have any derivatives that are not designated as hedges. As of September 30, 2024, we have not posted any collateral related to these agreements.
As of September 30, 2024 and December 31, 2023, we had the following interest rate swap derivatives (notional amount in millions):
Effective DateNotional AmountFixed RateMaturity Date
April 28, 2023$200.0 0.46 %December 31, 2025
April 28, 2023100.0 1.32 %December 31, 2025
April 28, 2023100.0 1.32 %December 31, 2025
December 31, 2025300.0 3.06 %December 14, 2028
December 31, 2025100.0 2.93 %December 14, 2028
As of September 30, 2024, our two forward interest rate swaps, combined with our three active swaps, serve to hedge $400.0 million of the variable cash flows on our variable rate Term Loan through December 14, 2028. The assets and liabilities
associated with these interest rate swaps are included in other current assets, other non-current assets and other long-term liabilities on the Consolidated Balance Sheets at their fair value amounts as described in Note 9, Fair Value Measurements.
In July 2022, we amended the maturity date of each of our three active interest rate swaps to December 31, 2025 with the other terms remaining unchanged. The remaining unrealized gains will be amortized as a decrease to interest expense, net through the original maturity dates of April 15, 2030 and December 15, 2028. For each of the three months ended September 30, 2024 and 2023, we amortized $1.8 million, respectively, and for each of the nine months ended September 30, 2024 and 2023, we amortized $5.3 million, respectively, of the remaining unrealized gains as a decrease to interest expense, net. During each of the three months ended September 30, 2024 and 2023, we amortized $1.0 million, respectively, and during each of the nine months ended September 30, 2024 and 2023, we amortized $3.1 million, respectively, of the remaining unrealized losses associated with the August 2020 terminated swaps as an increase to interest expense, net.
The amended swaps included off-market terms at inception. This other-than-insignificant financing element will be amortized as an increase to interest expense, net through the December 31, 2025 maturity date of the amended swaps. For each of the three months ended September 30, 2024 and 2023, we amortized $1.8 million, respectively, and for each of the nine months ended September 30, 2024 and 2023, we amortized $5.5 million, respectively, of the financing element as an increase to interest expense, net. Cash settlements with interest rate counterparties are recognized through cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows due to the other-than-insignificant financing element.
The changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in other comprehensive (loss) income, net of tax on the Condensed Consolidated Statements of Operations and Comprehensive Income and in accumulated other comprehensive income on the Condensed Consolidated Balance Sheets and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. We had no such changes during the nine months ended September 30, 2024 and 2023.
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense, net as interest payments are made on our variable-rate debt, and as our terminated and amended swaps are amortized. Over the next twelve months, we estimate that an additional $8.9 million will be reclassified as a decrease to interest expense, net.
The following table summarizes amounts recorded to interest expense, net included in the Condensed Consolidated Statements of Operations and Comprehensive Income related to our interest rate swaps (in millions):
Three months ended September 30,Nine months ended September 30,
2024202320242023
(Benefit) associated with swap net settlements$(4.5)$(4.5)$(13.5)$(12.2)
Expense associated with amortization of amended/terminated swaps1.1 1.1 3.3 3.3