DERIVATIVES

From time to time, we enter into interest rate swaps to fix a portion of our interest expense. We do not enter into derivative instruments for any purpose other than to manage interest rate exposure to fluctuations in the one-month LIBOR benchmark. That is, we do not engage in interest rate speculation using derivative instruments.

As of June 30, 2016, we had a $72.0 million interest rate swap outstanding with JPMorgan Chase Bank, N.A. This interest rate swap matures on December 31, 2020 and has a fixed rate of 1.42% per annum. The variable rate on the interest rate swap is the one-month LIBOR benchmark. At June 30, 2016, the one-month LIBOR rate was 0.45%.

We typically designate all interest rate swaps as cash flow hedges and, accordingly, record the change in fair value for the effective portion of these interest rate swaps in accumulated other comprehensive income rather than current period earnings until the underlying hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. For the three and six months ended June 30, 2016, there was no ineffectiveness. As of June 30, 2016, we expect to reclassify $0.3 million from accumulated other comprehensive income to earnings within the next twelve months.

The fair value of our derivative instruments was included in our Condensed Consolidated Balance Sheets as follows (in thousands):



	Balance Sheet Classification	As of
	Balance Sheet Classification	June 30, 2016		December 31, 2015
Derivatives instruments designated as cash flow hedges:
Interest rate swap contract	Accrued liabilities	$	298	$	—
	Other long-term liabilities	965		—
		$	1,263	$	—

The effect of derivative instruments on our Condensed Consolidated Statements of Operations was as follows (in thousands):



	Statement of Operations Classification	Three Months Ended June 30,					Six Months Ended June 30,
	Statement of Operations Classification	2016			2015		2016			2015
Derivatives instruments designated as cash flow hedges:
Loss recognized in other comprehensive income before reclassifications	---	$	(219	)	$	—	$	(980	)	$	—
Loss reclassified from accumulated other comprehensive income to earnings for the effective portion	Interest expense	$	(185	)	$	—	$	(313	)	$	—
Related tax effect	Income tax benefit	$	71		$	—	$	120		$	—