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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended
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Mar. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES Our financial results are subject to market risk from potential changes in interest rates. To manage this exposure, we utilize derivative financial instruments. We account for derivative financial instruments under ASC Topic 815, Derivatives and Hedging, (“ASC 815”), and record them at fair value as assets or liabilities in the Consolidated Balance Sheets. The accounting for changes in their fair value depends on their intended use. Gains and losses on derivatives designated and qualifying as cash flow hedges are recorded in accumulated other comprehensive income (“AOCI”) and reclassified into earnings when the hedged transaction occurs. Similarly, gains and losses on derivatives designated and qualifying as net investment hedges are recorded in AOCI but are reclassified into earnings only upon partial or complete liquidation of the investment. Changes in the fair value of derivatives not designated as hedges or those that are no longer effective as hedges are recognized immediately in earnings. INTEREST RATE PRODUCTS We are exposed to cash flow interest rate risk on our variable-rate debt. To hedge this exposure, we use variable-to-fixed interest rate swaps. For these swaps, we report the gains or losses from changes in their fair value in AOCI and reclassify them to interest expense in the period the hedged interest payments affect earnings. If we de-designate or terminate a cash flow hedge while the hedged item still exists, the unrealized gain or loss on the cash flow hedge at the time of de-designation remains in AOCI. This amount is then amortized to interest expense on a straight-line basis over the remaining life of the hedged item. However, if the hedged item becomes ineffective, the related gain or loss is immediately reclassified from AOCI to earnings. INTEREST RATE SWAPS The following table contains information on the outstanding interest rate swaps as of March 31, 2025:
Outstanding Interest Rate Swaps (a)
Date Entered Into | Term | Notional Amount | Related Debt Facility | Fixed Rate of Swap | Bank Margin on Debt (b) | Total Effective Interest Rate (c)
April 2016 | 10 years | $100,000 |  | 2016 Incremental Term Loan | 1.50 | % | 1.75 | % | 3.25 | %
April 2016 | 10 years | 100,000 |  | 2016 Incremental Term Loan | 1.51 | % | 1.75 | % | 3.26 | %
February 2022 | 7 years | 200,000 |  | 2021 Incremental Term Loan | 0.67 | % | 1.65 | % | 2.32 | %
August 2024 | 4 years | 100,000 |  | 2015 Term Loan | 0.78 | % | 1.60 | % | 2.38 | %
August 2024 | 4 years | 50,000 |  | 2015 Term Loan | 0.64 | % | 1.60 | % | 2.24 | %
August 2024 | 4 years | 50,000 |  | 2015 Term Loan | 3.29 | % | 1.60 | % | 4.89 | %
(a)All interest rate swaps are designated as cash flow hedges and qualify for hedge accounting. (b)Includes the SOFR Credit Spread Adjustment component of 0.1%. (c)Rate is before estimated patronage payments. The following table demonstrates the impact, gross of tax, of our derivatives on the Consolidated Statements of Income and Comprehensive Income (Loss) for the three months ended March 31, 2025 and 2024:
|  |  | Three Months Ended March 31,
| Income Statement Location |  | 2025 |  | 2024
Derivatives designated as cash flow hedges: |  |  |  |  |
Interest rate products | Other comprehensive (loss) income, relating to continuing operations |  | ($4,247) |  |  | $15,041 |
| Interest expense, net |  | (4,511) |  |  | (7,278) |
During the next 12 months, the amount of the AOCI balance, net of tax, expected to be reclassified into earnings is a gain of approximately $15.3 million. The following table provides details of these expected reclassifications:
| Amount expected to be reclassified into earnings in next 12 months
Derivatives designated as cash flow hedges: |
Interest rate products (a) | $15,320 |
Total estimated net gain on derivatives contracts | $15,320 |
(a) These reclassified amounts are expected to perfectly offset variable interest rate payments to debt holders, resulting in no net impact on our earnings or cash flows. The following table contains the notional amounts of the derivative financial instruments recorded in the Consolidated Balance Sheets:
| Notional Amount |
| March 31, 2025 |  | December 31, 2024 |
Derivatives designated as cash flow hedges: |  |  |  |
Interest rate swaps | $600,000 |  |  | $600,000 |  |
The following table contains the fair values of the derivative financial instruments recorded in the Consolidated Balance Sheets at March 31, 2025 and December 31, 2024:
| Location on Balance Sheet |  | Fair Value Assets / (Liabilities) (a)
|  |  | March 31, 2025 |  | December 31, 2024
Derivatives designated as cash flow hedges: |  |  |  |
Interest rate swaps | Other assets |  | $40,367 |  |  | $49,353 |
(a) See Note 9 — Fair Value Measurements for further information on the fair value of our derivatives including their classification within the fair value hierarchy. OFFSETTING DERIVATIVES We present derivative financial instruments at their gross fair values in the Consolidated Balance Sheets. These instruments are not subject to master netting arrangements that would permit the right of offset.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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