Note 9 - Interest Rate Swaps

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

9. INTEREST RATE SWAPS

The Company is party to two interest rate swap agreements, designated as cash flow hedges, to manage the risk of fluctuations in interest rates on its variable rate LIBOR debt. Changes in the fair values of the interest rate swaps are reported through other comprehensive income until the underlying hedged debt’s interest expense impacts net income, at which point the corresponding change in fair value is reclassified from accumulated other comprehensive income to interest expense.

A summary of the significant terms of the Company’s interest rate swap agreements is as follows (dollars in thousands):

	Entry Date	Effective Date	Maturity Date(1)	Notional Amount		Settlement Type	Settlement Frequency	Fixed Base Rate
Swap A	3/7/2019	3/11/2019	3/11/2029	$	850,000	Receive one-month LIBOR, pay fixed	Monthly		2.653	%
Swap B	3/6/2019	6/15/2020	2/28/2029		350,000	Receive one-month LIBOR, pay fixed	Monthly		2.739	%
Total				$	1,200,000

⁽¹⁾ Each swap may be terminated prior to the scheduled maturity at the election of the Company or the financial institution counterparty under the terms provided in each swap agreement.

The combined fair values of the Company’s interest rate swaps are reflected within the condensed consolidated balance sheets as follows (in thousands):

	March 31, 2021		December 31, 2020
Liabilities:
Current portion:
Accounts payable and accrued liabilities	$	30,504	$	30,646
Noncurrent portion:
Interest rate swap liability	$	81,917	$	155,357
Total	$	112,421	$	186,003
Stockholders’ Equity:
Accumulated other comprehensive loss	$	84,626	$	140,090

The combined effect of the Company’s interest rate swaps on the condensed consolidated statements of operations and comprehensive income was as follows (in thousands):

	Three Months Ended March 31,
	2021			2020
Interest expense	$	7,649		$	2,084
Unrealized (gain) loss on cash flow hedges, gross	$	(73,582	)	$	112,314
Less: Tax effect		18,118			(27,686	)
Unrealized (gain) loss on cash flow hedges, net of tax	$	(55,464	)	$	84,628

The Company does not hold any derivative instruments for speculative trading purposes.