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Derivatives and Hedging Activities | 12 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Activities | DERIVATIVES AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives We are exposed to certain risks arising from both our business operations and economic conditions. We manage exposure to a wide variety of business and operational risks through our core business activities. We manage economic risks, including interest rate, liquidity and credit risk primarily by overseeing the amount, sources and duration of debt funding and the use of derivative financial instruments. Specifically, we have entered into derivative financial instruments to manage exposure to interest rate movements that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing and duration of our known or expected cash receipts and known or expected cash payments principally related to our investments and borrowings. 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 year ended December 31, 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 December 31, 2022, we have not posted any collateral related to these agreements. As of December 31, 2022, we had the following interest rate swap derivatives (notional amount in millions):
Effective Date |  | Notional Amount |  | Fixed Rate |  | Maturity Date
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 (notional amount in millions):
Effective Date |  | Notional Amount |  | Fixed Rate |  | Maturity Date
July 30, 2021 |  | $ | 200.0 |  |  | 0.51 | % |  | April 15, 2030
December 31, 2021 |  | 100.0 |  |  | 1.37 | % |  | December 31, 2028
December 31, 2021 |  | 100.0 |  |  | 1.37 | % |  | December 31, 2028
On July 8, 2022, we amended the maturity date of each of our three active interest rate swaps to December 31, 2025 with other terms remaining unchanged. Collectively, the swap 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 year ended December 31, 2022, we amortized $3.4 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 Consolidated Statements of Cash Flow for the year ended December 31, 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. As of December 31, 2022, we amortized $3.6 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 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 December 31, 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 10, Fair Value Measurements. In August 2020, we terminated two then-existing interest rate swaps and one then-existing forward interest rate swap. During the years ended December 31, 2022, 2021 and 2020, we amortized $3.8 million, $3.2 million and $1.3 million, respectively, of the $17.8 million unrealized loss that existed at the time of termination as an increase 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 gain (loss), net of tax on the Consolidated Statements of Operations and Comprehensive Income and in accumulated other comprehensive income (loss) on the 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 years ended December 31, 2022 and 2021. 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 $11.1 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):
|  | As of December 31,
|  | 2022 |  | 2021 |  | 2020
(Benefit) expense associated with swap net settlements |  | $ | (3,128) |  |  | $ | 370 |  |  | $ | 1,453 |
Expense associated with amortization of amended/terminated swaps |  | 3,928 |  |  | 3,223 |  |  | 1,326 |
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. During the year ended December 31, 2022, we adopted ASU 2022-06, Reference Rate Reform: Deferral of the Sunset Date of Topic 848 (Topic 848) which extends the sunset date of previous adopted guidance under ASU 2020-04 to December 31, 2024. 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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