DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

12 Months Ended

Dec. 31, 2015

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company’s objective in using interest rate derivatives was to add stability to interest expense and to manage its exposure to the interest rate movements of its variable‑rate debt. To accomplish this objective, the Company primarily used interest rate derivatives as part of its interest rate risk management strategy. Interest rate derivatives designated as cash flow hedges involved the receipt of variable‑rate amounts from a counterparty in exchange for the Company making fixed‑rate payments over the life of the agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of interest rate derivatives designated and that qualified as cash flow hedges was recorded in accumulated other comprehensive income and was subsequently reclassified into earnings in the period that the hedged forecasted transaction affected earnings.

As a result of the repayment of its variable‑rate debt on September 20, 2013, the Company terminated its interest rate derivatives and paid $5.4 million, the net fair value of those derivatives, to its counterparties. The Company recognized this amount as an expense during the year ended December 31, 2013 and as a separate line in the consolidated income statements.

Amounts previously reported in accumulated other comprehensive income related to the interest rate derivatives were reclassified to “Loss on interest rate derivative contracts” as of the date of the prepayment of the Company’s outstanding term notes.

The table below presents the effect of the Company’s derivative financial instruments on the consolidated income statements for the year ended December 31, 2013 (in thousands):

					Amount of Gain or
		Amount of Gain or			(Loss) Reclassified
		(Loss) Recognized		Location of Gain or	from Accumulated
		in Other		(Loss) Reclassified	Other
		Comprehensive		from Accumulated	Comprehensive
		Income on		Other	Income into
	Derivative in Cash Flow	Derivative		Comprehensive	Income
Year ended December 31,	Hedging Relationships	(Effective Portion)		Income into Income (Effective Portion)	(Effective Portion)
2013	Interest Rate Swap	$	6,255	Interest expense	$	764