DERIVATIVE AND HEDGING ACTIVITIES

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company from time to time enters into derivative financial instruments, such as interest rate collar agreements (“Collars”), to manage its exposure to fluctuations in interest rates under the Company’s variable rate debt.

Hedge Accounting Treatment

As of June 30, 2024, the Company had no derivative instruments qualifying for hedge accounting treatment.

As of June 30, 2023, the Company had the following derivative instrument which was a cash flow hedge that qualified for hedge accounting treatment. The Company settled this transaction in November 2023, which was earlier than its original expiration date of June 28, 2024. After exiting the position, the Company had no derivative instruments qualifying for hedge accounting treatment.

The following table presents the derivative that was outstanding as of June 30, 2023.

Type
Of Hedge

Notional
Amount

Effective
Date

Collar

Fixed
SOFR Rate

Expiration
Date

(amount in millions)

Cap

2.75%

Collar(1)

90.0

Jun. 25, 2019

Floor

0.402%

Jun. 28, 2024

Total

90.0

(1)The notional amount of this derivative decreased to $90.0 million in June 2023 and the Company settled the transaction in November 2023.

For the six months ended June 30, 2023, the Company recorded the net change in the fair value of this derivative as a loss of $1.2 million (net of tax benefit of $0.4 million as of June 30, 2023) to the condensed consolidated statement of comprehensive income (loss). The fair value of this derivative was determined using observable market-based inputs (a Level 2 measurement) and the impact of credit risk on a derivative’s fair value (the creditworthiness of the Company for liabilities). As of June 30, 2023, the fair value of this derivative was an asset of $2.3 million, and was recorded in Other assets.

The following table presents the accumulated net derivative (loss) recorded in other comprehensive income (loss) for the three months ended June 30, 2023:


Other Comprehensive Income (Loss)
Net Change in Accumulated Derivative Unrealized Gain (Loss)		Net Amount of Accumulated Derivative Gain (Loss) Reclassified to the Consolidated Statement of Operations
Three Months Ended June 30,
2023		2023
(amounts in thousands)
$	(391)	$	1,274

The following table presents the accumulated net derivative loss recorded in other comprehensive income (loss) for the six months ended June 30, 2023:


Other Comprehensive Income (Loss)
Net Change in Accumulated Derivative Unrealized Gain (Loss)		Net Amount of Accumulated Derivative Gain (Loss) Reclassified to the Consolidated Statement of Operations
Six Months Ended June 30,
2023		2023
(amounts in thousands)
$	(1,231)	$	2,298

The following table presents the accumulated derivative gain (loss) recorded in other comprehensive income (loss) as of June 30, 2023:


	Accumulated Derivative Gain
Description	June 30, 2023
	(amounts in thousands)
Accumulated derivative unrealized gain (loss)	$	1,711

Undesignated Derivatives

The Company was subject to equity market risks due to changes in the fair value of the notional investments selected by its employees as part of its non-qualified deferred compensation plans. During the quarter ended June 30, 2020, the Company entered into a Total Return Swap ("TRS") in order to manage the market risks associated with its non-qualified deferred compensation plan liabilities. The Company paid a floating rate, based on the SOFR, on the notional amount of the TRS. The TRS was designed to substantially offset changes in its non-qualified deferred compensation plan's liabilities due to changes in the value of the investment options made by employees. The Company did not designate the TRS as an accounting hedge. Rather, the Company recorded all changes in the fair value of the TRS to earnings to offset the market value changes of its non-qualified deferred compensation plan liabilities. The contract term of the TRS expired April 2023 and was not renewed.