Derivative Instruments

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company is exposed to interest rate risk related to its variable-rate debt. The Company balances its cost of debt and exposure to interest rates primarily through its mix of fixed-rate and variable-rate debt. From time to time, the Company may use interest rate swaps to manage its exposure to interest rate risk.

Interest Rate Swaps

As of December 31, 2023, the Company had three interest rate swap agreements, one of which was designated as a cash flow hedge. The key terms of the agreements are as follows (dollars in millions):


Effective	Maturity	Fixed Interest	Notional Amount at		Asset (Liability) Fair Value at
Date	Date	Rate	December 31, 2023		December 31, 2023		December 31, 2022
Interest Rate Swap Agreements1
4/7/2016	8/1/2029	3.14%	$	52.7	$	4.1	$	5.5

Forward Interest Rate Swap Agreements2
5/1/2024	12/9/2031	4.88%	$	57.0	$	(1.1)	$	(1.3)
12/9/2024	12/9/2031	4.83%	$	73.0	$	(1.6)	$	(1.5)

1 In 2022, the Company terminated a $50.0 million notional interest rate swap agreement resulting in a realized gain of $0.5 million that is included within Interest and other income (expense), net during the year ended December 31, 2022.
2 In 2022, the Company entered into two forward starting interest rate swap agreements with notional amounts of $57.0 million and $73.0 million in order to hedge interest rate fluctuations related to $130.0 million of future financing aligned with the effective and maturity dates listed. The Company initially designated the hedging relationship of the two forward interest swap agreements as cash flow hedges. As of December 31, 2023, the Company de-designated the hedging relationship related to the two forward interest rate swaps as it was determined that underlying cash flows related to the designated hedging relationships were no longer probable of occurring . The Company has not terminated the forward interest rate swap agreements.

The asset related to the interest rate swap designated as a cash flow hedge as of December 31, 2023 and 2022, is presented within Prepaid expenses and other assets in the consolidated balance sheets. The liabilities related to the forward starting interest rate swaps as of December 31, 2023 and 2022, are presented within Accrued and other liabilities in the consolidated balance sheets.

Designated Hedging Instruments

For derivative instruments that are designated and qualify as cash flow hedges, changes in fair value of the cash flow hedges are recorded in Accumulated other comprehensive income (loss) and subsequently reclassified into Interest expense as interest is incurred on the related variable-rate debt. Periodic cash interest settlements related to cash flow hedges are presented as operating cash flows in the Company's consolidated statements of cash flows.

Terminated and De-Designated Hedging Instruments

When it is probable that a forecasted hedged transaction will not occur, hedge accounting is discontinued, and amounts deferred in Accumulated Other Comprehensive Income are recognized immediately. For derivatives not designated as hedging instruments, including de-designated hedges, changes in fair value are recorded in Interest and other income (expense), net. During the years ended December 31, 2023 and 2022, the Company reclassified from Accumulated other comprehensive income (loss) and recognized in Interest and other income (expense), net a $2.7 million loss related to de-designated hedging relationships and a $0.5 million gain related to a terminated interest rate swap agreement, respectively.

Statement of Comprehensive Income (Loss) Derivative Instruments Impact

The following table represents the pre-tax effect of the derivative instruments in the Company's consolidated statements of comprehensive income (loss) during the three years ended December 31, 2023, 2022, and 2021, (in millions):


	2023		2022		2021
Information regarding derivatives designated as hedging instruments
Amount of gain (loss) recognized in OCI on derivatives	$	0.3	$	4.9	$	2.3
Impact of reclassification adjustment to interest expense included in Net Income (Loss)	$	(1.7)	$	0.5	$	1.6

Information regarding derivatives terminated and de-designated hedging instruments
Reclassification of interest rate derivative loss (gain) to interest and other income (expense), net included in Net Income (Loss)	$	2.7	$	(0.5)	$	—

As of December 31, 2023, the Company expects to reclassify $1.9 million of net gains (losses) on derivative instruments from accumulated other comprehensive income to earnings during the next 12 months.