Quarterly report pursuant to Section 13 or 15(d)

Financial Instruments and Derivatives

v3.10.0.1
Financial Instruments and Derivatives
9 Months Ended
Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments and Derivatives
Financial Instruments and Derivatives
The Company uses interest rate swap derivative instruments to manage earnings and cash flow exposure resulting from changes in interest rates. These interest rate swaps apply a fixed interest rate on a portion of the Company's expected LIBOR-indexed floating-rate borrowings. The Company held the following interest rate swaps as of September 30, 2018 (in thousands):

Hedged Item
Current Notional Amount
Designation Date
Effective Date
Termination Date
Fixed Interest Rate
Floating Rate
Estimated Fair Value
1-month USD LIBOR Loan
$
40,000

May 31, 2018
June 1, 2018
September 23, 2021
2.611%
1-month USD LIBOR
$
(130
)
Total interest rate derivatives designated as cash flow hedge
$
40,000

 
 
 
 
 
$
(130
)


The Company designated these derivative instruments as cash flow hedges. The Company assesses the effectiveness of these derivative instruments and records the change in the fair value of a derivative instrument designated as a cash flow hedge as unrealized gains or losses in accumulated other comprehensive income (“AOCI”), net of tax. Once the hedged item affects earnings, the effective portion of any gain or loss will be reclassified to earnings. If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time.
As of September 30, 2018, the Company expects that approximately $11.0 thousand of losses associated with the cash flow hedge, net of tax, could be reclassified from AOCI into earnings within the next twelve months.