XML 25 R14.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Derivative Instruments and Hedging Activity | 6 Months Ended
--- | ---
Jun. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | Note 7 – Derivative Instruments and Hedging Activity The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risk, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and, to a limited extent, the use of derivative instruments. For additional information regarding the leveling of our derivatives (refer to Note 9 – Fair Value Measurements). The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the agreement without exchange of the underlying notional amount. In April 2012, the Company entered into an amortizing forward-starting interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $22.3 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.92%. The notional amount as of June 30, 2018 is $18.9 million. This swap effectively converted $22.3 million of variable-rate borrowings to fixed-rate borrowings from July 1, 2013 to May 1, 2019. As of June 30, 2018, this interest rate swap was valued as an asset of approximately $0.2 million. In September 2013, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $35.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.20%. This swap effectively converted $35.0 million of variable-rate borrowings to fixed-rate borrowings from October 3, 2013 to September 29, 2020. As of June 30, 2018, this interest rate swap was valued as an asset of approximately $0.3 million. In July 2014, the Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates on $65.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 2.09%. This swap effectively converted $65.0 million of variable-rate borrowings to fixed-rate borrowings from July 21, 2014 to July 21, 2021. As of June 30, 2018, this interest rate swap was valued as an asset of approximately $1.1 million. In September 2017, the Company entered into an interest rate swap agreement to hedge against changes in future cash flows resulting from changes in interest rates on $40.0 million in variable-rate borrowings. Under the terms of the interest rate swap agreement, the Company receives from the counterparty interest on the notional amount based on 1 month LIBOR and pays to the counterparty a fixed rate of 1.40%. This swap effectively converted $40.0 million of variable-rate borrowings to fixed-rate borrowings from August 1, 2016 to July 1, 2023. As of June 30, 2018, this interest rate swap was valued as an asset of approximately $2.5 million. Companies are required to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. The Company has designated these derivative instruments as cash flow hedges. As such, the effective portion of changes in the fair value of the derivatives designated, and that qualify as cash flow hedges, is recorded as a component of other comprehensive income (loss). The ineffective portion of the change in fair value of the derivative instrument is recognized directly in interest expense. For the three and six months ended June 30, 2018, the Company has not recorded any hedge ineffectiveness in earnings. Amounts in Accumulated Other Comprehensive Income (Loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $0.7 million will be reclassified as a reduction to interest expense. The Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands, except number of instruments):
|  | Number of Instruments |  | Notional |
|  | June 30, |  | December 31, |  | June 30, |  | December 31, |
Interest Rate Derivatives |  | 2018 |  | 2017 |  | 2018 |  | 2017 |
Interest Rate Swap |  | 4 |  | 5 |  | $ | 158,924 |  | $ | 184,304 |
The table below presents the estimated fair value of the Company’s derivative financial instruments, as well as their classification in the consolidated balance sheets (in thousands).
|  | Asset Derivatives |
|  | June 30, 2018 |  | December 31, 2017 |
|  | Fair Value |  | Fair Value |
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |
Interest Rate Swaps |  | $ | 4,062 |  | $ | 1,592 |
|  | Liability Derivatives |
|  | June 30, 2018 |  | December 31, 2017 |
|  | Fair Value |  | Fair Value |
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |
Interest Rate Swaps |  | $ | - |  | $ | 242 |
The table below displays the effect of the Company’s derivative financial instruments in the consolidated statements of operations and other comprehensive loss for the three and six months ended June 30, 2018 and 2017 (in thousands).
|  | Derivatives in Cash Flow Hedging Relationships |  | Amount of Income/(Loss) Recognized in OCI on Derivative (Effective Portion) |  | Location of Income/(Loss) Reclassifed from Accumulated OCI into Income (Effective Portion) |  | Amount of Income/(Loss) Reclassified from Accumulated OCI into Expense (Effective Portion) |
Three months ended June 30 |  |  |  |  | 2018 |  |  | 2017 |  |  |  |  | 2018 |  |  | 2017 |
|  | Interest rate swaps |  | $ | 792 |  | $ | (411) |  | Interest Expense |  | $ | (4) |  | $ | (435) |
Six months ended June 30 |  |  |  |  | 2018 |  |  | 2017 |  |  |  |  | 2018 |  |  | 2017 |
|  | Interest rate swaps |  | $ | 2,712 |  | $ | 330 |  | Interest Expense |  | $ | (91) |  | $ | (900) |
Credit-risk-related Contingent Features The Company has agreements with two of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness.
As of June 30, 2018, the fair value of derivatives in a net liability position related to these agreements, which includes accrued interest but excludes any adjustment for nonperformance risk, was $0.0 million. Although the derivative contracts are subject to master netting arrangements, which serve as credit mitigants to both us and our counterparties under certain situations, we do not net our derivative fair values or any existing rights or obligations to cash collateral on the consolidated balance sheets. The table below presents a gross presentation of the effects of offsetting and a net presentation of the Company’s derivatives as of June 30, 2018 and December 31, 2017. The gross amounts of derivative assets or liabilities can be reconciled to the Tabular Disclosure of Fair Values of Derivative Instruments above, which also provides the location that derivative assets and liabilities are presented on the consolidated balance sheets (in thousands):
Offsetting of Derivative Assets |
As of June 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  | Gross Amounts Not Offset in the Statement of Financial Position |  |  |  |
|  | Gross Amounts of Recognized Assets |  | Gross Amounts Offset in the Statement of Financial Position |  | Net Amounts of Assets presented in the statement of Financial Position |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount |
Derivatives |  | $ | 4,062 |  | $ | - |  | $ | 4,062 |  | $ | - |  | $ | - |  | $ | 4,062 |
Offsetting of Derivative Liabilities |
As of June 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  | Gross Amounts Not Offset in the Statement of Financial Position |  |  |  |
|  | Gross Amounts of Recognized Liabilities |  | Gross Amounts Offset in the Statement of Financial Position |  | Net Amounts of Liabilities presented in the statement of Financial Position |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount |
Derivatives |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |
Offsetting of Derivative Assets |
As of December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  | Gross Amounts Not Offset in the Statement of Financial Position |  |  |  |
|  | Gross Amounts of Recognized Assets |  | Gross Amounts Offset in the Statement of Financial Position |  | Net Amounts of Assets presented in the statement of Financial Position |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount |
Derivatives |  | $ | 1,592 |  | $ | - |  | $ | 1,592 |  | $ | (42) |  | $ | - |  | $ | 1,550 |
Offsetting of Derivative Liabilities |
As of December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  | Gross Amounts Not Offset in the Statement of Financial Position |  |  |  |
|  | Gross Amounts of Recognized Liabilities |  | Gross Amounts Offset in the Statement of Financial Position |  | Net Amounts of Liabilities presented in the statement of Financial Position |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount |
Derivatives |  | $ | 242 |  | $ | - |  | $ | 242 |  | $ | (42) |  | $ | - |  | $ | 200 |

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration