Derivative Financial Instruments

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The following table summarizes the terms and fair values of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets (dollars in thousands):

								Fair Value at December 31,
								Assets (3)			Liabilities (3)
Effective Date	Maturity Date	Mandatory Settlement Date (1)		Notional Amount		Bank Pays Variable Rate of	Regency Pays Fixed Rate of	2014		2013	2014			2013
10/1/11	9/1/14	N/A		$	9,000	1 Month LIBOR	0.760%	$	—	—	$	—		(34	)
10/16/13	10/16/20	N/A		28,100		1 Month LIBOR	2.196%	—		82	(764		)	—
4/15/14	4/15/24	10/15/14	(2)	75,000		3 Month LIBOR	2.087%	—		7,476	—			—
4/15/14	4/15/24	10/15/14	(2)	50,000		3 Month LIBOR	2.088%	—		4,978	—			—
4/15/14	4/15/24	10/15/14	(2)	35,000		3 Month LIBOR	2.873%	—		1,036	—			—
4/15/14	4/15/24	10/15/14	(2)	60,000		3 Month LIBOR	2.864%	—		1,821	—			—
8/1/15	8/1/25	2/1/16		75,000		3 Month LIBOR	2.479%	—		8,516	(289		)	—
8/1/15	8/1/25	2/1/16		50,000		3 Month LIBOR	2.479%	—		5,670	(193		)	—
8/1/15	8/1/25	2/1/16		50,000		3 Month LIBOR	2.479%	—		5,658	(193		)	—
8/1/15	8/1/25	2/1/16		45,000		3 Month LIBOR	3.412%	—		—	(3,964		)	—
6/15/17	6/15/27	12/15/17		20,000		3 Month LIBOR	3.488%	—		—	(1,227		)	—
6/15/17	6/15/27	12/15/17		100,000		3 Month LIBOR	3.480%	—		—	(6,080		)	—
6/15/17	6/15/27	12/15/17		100,000		3 Month LIBOR	3.480%	—		—	(6,084		)	—
Total derivative financial instruments								$	—	35,237	(18,794		)	(34	)

⁽¹⁾ Represents the earliest date which the counterparty has the right to require cash settlement of the derivative. The Company may settle these swaps at any time before the mandatory settlement date.

⁽²⁾ The Company issued $250 million of 3.75%, fixed rate ten year unsecured bonds in May 2014. Prior to issuing the bonds, the Company locked in the ten year treasury rate using forward starting interest rate swaps to mitigate the risk of interest rates rising. In connection with the issuance of the new bonds, the Company terminated and settled these swaps, resulting in net cash proceeds of $4.6 million. These proceeds will offset bond interest expense over the life of the bonds, resulting in a lower effective interest rate of 3.59%.

⁽³⁾ Derivatives in an asset position are included within Other Assets in the accompanying Consolidated Balance Sheets, while those in a liability position are included within Accounts Payable and Other Liabilities.

These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges. The Company has master netting agreements, however the Company does not have multiple derivatives subject to a single master netting agreement with the same counterparties. Therefore none are offset in the accompanying Consolidated Balance Sheets.

The Company expects to issue new debt in 2015 and 2017. In order to mitigate the risk of interest rates rising before new borrowings are obtained, the Company previously entered into $220 million of forward starting interest rate swaps to partially hedge the new debt expected to be issued in 2015 and another $220 million of forward starting interest rate swaps to partially hedge the new debt expected to be issued in 2017. These interest rate swaps lock in the 10-year treasury rate and swap spread at a weighted average fixed rate of 2.67% and 3.48%, respectively. A current market based credit spread applicable to Regency will be added to the locked in fixed rate at time of issuance that will determine the final bond yield.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive income (loss) ("AOCI") and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings within interest expense.

The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements (in thousands):

Derivatives in FASB ASC Topic 815 Cash Flow Hedging Relationships:	Amount of Gain (Loss) Recognized in Other Comprehensive Loss on Derivative (Effective Portion)					Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)							Location of Gain or (Loss) Recognized in Income on  Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Year ended December 31,						Year ended December 31,								Year ended December 31,
	2014			2013	2012		2014			2013		2012			2014		2013	2012
Interest rate swaps	$	(49,968	)	30,985	4,220	Interest expense	$	(9,353	)	(9,433	)	(9,491	)	Other expenses	$	—	—	—

As of December 31, 2014, the Company expects $8.7 million of net deferred losses on derivative instruments accumulated in other comprehensive income to be reclassified into earnings during the next 12 months, of which $8.0 million is related to previously settled swaps.