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Note 9 - Interest Rate Swaps

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

9. INTEREST RATE SWAPS

The Company is party to two interest rate swap agreements, designated as cash flow hedges, to manage the risk of fluctuations in interest rates on its variable rate LIBOR debt. Changes in the fair values of the interest rate swaps are reported through other comprehensive income until the underlying hedged debt’s interest expense impacts net income, at which point the corresponding change in fair value is reclassified from accumulated other comprehensive income to interest expense.

A summary of the significant terms of the Company’s interest rate swap agreements is as follows (dollars in thousands):

Entry

Effective

Maturity

Notional

Settlement

Settlement

Fixed

Date

Date

Date⁽¹⁾

Amount

Type

Frequency

Base Rate

Swap A

3/7/2019

3/11/2019

3/11/2029

$

850,000

Receive one-month LIBOR, pay fixed

Monthly

2.65%

Swap B

3/6/2019

6/15/2020

2/28/2029

350,000

Receive one-month LIBOR, pay fixed

Monthly

2.74%

Total

$

1,200,000

⁽¹⁾	Each swap may be terminated prior to the scheduled maturity at the election of the Company or the financial institution counterparty under the terms provided in each swap agreement.

The combined fair values of the Company’s interest rate swaps are reflected within the condensed consolidated balance sheets as follows (in thousands):

		*September 30, 2021*				*December 31, 2020*
Liabilities:
Current portion:
Accounts payable and accrued liabilities		$	30,596			$	30,646
Noncurrent portion:
Interest rate swap liability		$	89,970			$	155,357
Total		$	120,566			$	186,003

Stockholders’ Equity:
Accumulated other comprehensive loss		$	91,148			$	140,090

The combined effect of the Company’s interest rate swaps on the condensed consolidated statements of operations and comprehensive income was as follows (in thousands):

		*Three Months Ended September 30,*								*Nine Months Ended September 30,*
		*2021*				*2020*				*2021*				*2020*
Interest expense		$	7,920			$	7,702			$	23,371			$	14,750

Unrealized (gain) loss on cash flow hedges, gross		$	(12,867	)		$	(7,610	)		$	(65,436	)		$	117,262
Less: Tax effect			3,364				1,806				16,494				(28,975	)
Unrealized (gain) loss on cash flow hedges, net of tax		$	(9,503	)		$	(5,804	)		$	(48,942	)		$	88,287

The Company does not hold any derivative instruments for speculative trading purposes.