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Derivatives and Hedging Activities | 9 Months Ended
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Sep. 30, 2022
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, 2022, 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, 2022, we have not posted any collateral related to these agreements. As of September 30, 2022, we had the following interest rate swap derivatives outstanding:
Effective Date |  | Notional Amount |  | Fixed Rate |  | Maturity Date
|  | (in millions) |  |  |  |
July 30, 2021 |  | $ | 200.0 |  |  | 0.51 | % |  | December 31, 2025
December 31, 2021 |  | 100.0 |  |  | 1.37 | % |  | December 31, 2025
December 31, 2021 |  | 100.0 |  |  | 1.37 | % |  | December 31, 2025
December 31, 2025 |  | 300.0 |  |  | 3.09 | % |  | December 14, 2028
December 31, 2025 |  | 100.0 |  |  | 2.98 | % |  | December 14, 2028
As of December 31, 2021, we had the following interest rate swap derivatives outstanding:
Effective Date |  | Notional Amount |  | Fixed Rate |  | Maturity Date
|  | (in millions) |  |  |  |
July 30, 2021 |  | $ | 200.0 |  |  | 0.51 | % |  | April 15, 2030
December 31, 2021 |  | 100.0 |  |  | 1.37 | % |  | December 15, 2028
December 31, 2021 |  | 100.0 |  |  | 1.37 | % |  | December 15, 2028
On July 8, 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. Collectively, the swaps had unrealized gains of $51.2 million at the amendment date of July 8, 2022. These 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 the three and nine months ended September 30, 2022, we amortized $1.6 million of these unrealized gains as a decrease to interest expense, net. In conjunction with the amendments, we received cash of $25.5 million from swap counterparties, which is presented in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows during the nine months ended September 30, 2022. The amended swaps include off-market terms at inception and contained a $25.7 million other-than-insignificant financing element which will amortize to interest expense, net through the new December 31, 2025 maturity date of the amended swaps. For the three and nine months ended September 30, 2022, we amortized $1.7 million of the financing element as an increase to interest expense, net. Future net cash settlements are recognized through cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows due to the other-than-insignificant financing element. Also in July 2022, we entered into two new forward interest rate swaps. As of September 30, 2022, these two forward interest rate swaps, combined with our three amended swaps, serve to hedge $400.0 million of the variable cash flows on our variable rate Term Loan through maturity. The assets and liabilities associated with these interest rate swaps are included in other current assets, other non-current assets and other current liabilities on the Consolidated Balance Sheets at their fair value amounts as described in Note 9, Fair Value Measurements. In August 2020, we terminated two then-existing interest rate swaps and one then-existing forward interest rate swap. For the three and nine months ended September 30, 2022 we amortized $1.1 million and $2.8 million of the $17.8 million unrealized loss existing at the time of termination as an increase to interest expense, net. For the three and nine months ended September 30, 2021, we amortized $0.8 million and $2.4 million of the unrealized loss to interest expense, net. The changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in other comprehensive income, net of tax on the Condensed Consolidated Statements of Operations and Comprehensive Income and in accumulated other comprehensive income (loss) 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, 2021 or 2022. Amounts reported in accumulated other comprehensive income (loss) 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 $9.0 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 thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
(Benefit) expense associated with swap net settlements | $ | (1,303) |  |  | $ | 147 |  |  | $ | (344) |  |  | $ | 147 |
Expense associated with amortization of terminated swaps | 1,127 |  |  | 812 |  |  | 2,796 |  |  | 2,412 |
LIBOR is used as a reference rate for our interest rate swap agreements we use to hedge our interest rate exposure. The Intercontinental Exchange Benchmark Administration, the administrator of LIBOR, announced in March 2021 its intention to extend the publication of certain LIBOR settings, including the setting we use as a reference rate, to June 2023. In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848) and in January 2021, the FASB subsequently issued ASU 2021-01, Reference Rate Reform - Scope, which clarified the scope and application of the original guidance. The purpose of this guidance is to provide relief for impacted areas as it relates to impending reference rate reform. We elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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