DERIVATIVE INSTRUMENTS

The Company is exposed to interest rate risks related to its business operations. To reduce the interest rate risk the Company uses an interest rate swap contract. The Company does not use derivatives for speculative trading purposes.

Cash flow hedge

To offset the variability of cash flows in interest payments associated with a portion of the Company’s variable rate debt, the Company entered into an interest rate swap contract in January 2018 which is designated as a cash flow hedge. The interest rate swap hedges one month LIBOR which effectively converts a portion of the variable-rate debt to a fixed interest rate. The interest rate swap effective date is December 31, 2018 and the maturity date is January 23, 2023. As of March 31, 2019 the Company’s interest rate swap agreement, which hedges long-term debt obligations, has a notional amount of $300.0 million, which decreases over time by $50 million increments. The contract has a fixed rate of 2.63%.

The following table illustrates the location and fair value of the Company’s interest rate swap at March 31, 2019 and December 31, 2018 (in millions):



	Liability Derivatives
	March 31, 2019			December 31, 2018
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate swap	Other current liabilities	$	0.7	Other current liabilities	$	0.3
Interest rate swap	Other noncurrent liabilities	$	2.9	Other noncurrent liabilities	$	1.4
Total derivatives designated as hedging instruments		$	3.6		$	1.7

The interest rate swap is included at its estimated fair value as an asset or a liability in the Condensed Consolidated Balance Sheet based on a discounted cash flow model using applicable market swap rates and certain assumptions. The fair value of the swap recorded in Accumulated Other Comprehensive Income (Loss) may be recognized in the Condensed Consolidated Statement of Operations within interest income (expense) if certain terms of the agreement change, are modified or if the loan is extinguished. As of March 31, 2019 there was no hedge ineffectiveness associated with the Company’s interest rate swap and no portion of the cash flow hedge is excluded from the assessment of effectiveness. The Company recognized within interest expense less than $0.1 million of loss of other comprehensive income within the Condensed Consolidated Statement of Operations during the period ended March 31, 2019. The Company expects to reclassify in the next 12 months a loss of approximately $0.7 million from accumulated other comprehensive income into earnings, as a component of interest expense, related to the Company’s interest rate swap based on the borrowing rates at March 31, 2019.