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Accounting for Derivatives | 6 Months Ended
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Jun. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Accounting for Derivatives | 8. Accounting for Derivatives We are exposed to market risks associated with changes in interest rates. We use derivative financial instruments to minimize the risks and/or costs associated with financial activities by managing our exposure to interest rate fluctuations on a portion of our debt obligations. We do not use derivative financial instruments for trading or other speculative purposes. Interest Rate Risk At June 30, 2016, the Partnership was a party to the following interest rate swaps, which were entered into to offset changes in expected cash flows due to fluctuations in the associated variable interest rates:
Expiration Date |  | Notional Value (in millions)
May 2018 |  | $ | 300 |
May 2019 |  | 100 |
May 2020 |  | 100 |
|  | $ | 500 |
As of June 30, 2016, the weighted average effective fixed interest rate on the interest rate swaps was 1.6%. We have designated these interest rate swaps as cash flow hedging instruments so that any change in their fair values is recognized as a component of comprehensive income (loss) and is included in accumulated other comprehensive income (loss) to the extent the hedge is effective. As the swap terms substantially coincide with the hedged item and are expected to offset changes in expected cash flows due to fluctuations in the variable rate, we currently do not expect a significant amount of ineffectiveness on these hedges. We perform quarterly calculations to determine whether the swap agreements are still effective and to calculate any ineffectiveness. We recorded an immaterial amount of interest income during the six months ended June 30, 2016 as compared to $0.4 million of interest income during the six months ended June 30, 2015 due to ineffectiveness related to interest rate swaps. We estimate that $5.0 million of deferred pre-tax losses attributable to interest rate swaps and included in our accumulated other comprehensive income (loss) at June 30, 2016, will be reclassified into earnings as interest expense at then current values during the next twelve months as the underlying hedged transactions occur. Cash flows from derivatives designated as hedges are classified in our condensed consolidated statements of cash flows under the same category as the cash flows from the underlying assets, liabilities or anticipated transactions, unless the derivative contract contains a significant financing element; in this case, the cash settlements for these derivatives are classified as cash flows from financing activities in our condensed consolidated statements of cash flows. The following tables present the effect of derivative instruments on our consolidated financial position and results of operations (in thousands):
|  | Fair Value Asset (Liability)
| Balance Sheet Location | June 30, 2016 |  | December 31, 2015
Derivatives designated as hedging instruments: |  |  |  |
Interest rate swaps | Intangible and other assets, net | $ | — |  |  | $ | 45 |
Interest rate swaps | Accrued liabilities | (5,397 | ) |  | (4,608 | )
Interest rate swaps | Other long-term liabilities | (7,005 | ) |  | (1,421 | )
Total derivatives |  | $ | (12,402 | ) |  | $ | (5,984 | )
| Pre-tax Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives |  | Location of Pre-tax Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) |  | Pre-tax Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss)
Derivatives designated as cash flow hedges: |  |  |  |  |
Interest rate swaps |  |  |  |  |
Three months ended June 30, 2016 | $ | (3,518 | ) |  | Interest expense |  | $ | (1,159 | )
Three months ended June 30, 2015 | 255 |  |  | Interest expense |  | (2,016 | )
Six months ended June 30, 2016 | (9,450 | ) |  | Interest expense |  | $ | (2,275 | )
Six months ended June 30, 2015 | (5,998 | ) |  | Interest expense |  | (3,691 | )
The counterparties to the derivative agreements are major international financial institutions. We monitor the credit quality of these financial institutions and do not expect non-performance by any counterparty, although such non-performance could have a material adverse effect on us. The Partnership has no specific collateral posted for its derivative instruments. The counterparties to the interest rate swaps are also lenders under the Partnership’s senior secured credit facility and, in that capacity, share proportionally in the collateral pledged under the related facility.

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