Note O — Derivative Financial Instruments

We are exposed to certain risks arising from both our business operations and economic conditions. We manage economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings.

Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded on our consolidated balance sheet in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

As of September 30, 2019, our swaps had a notional value outstanding of $312.5 million. As of December 31, 2018, our swaps had a notional value outstanding of $325.0 million.

Change in Net Loss on Cash Flow Hedges Including Accumulated Other Comprehensive Loss

The following table presents the activity of cash flow hedges included in accumulated other comprehensive loss for the three months ended September 30, 2019 and September 30, 2018:


(in thousands)	Cash Flow Hedges
Balance as of June 30, 2019	$	(10,560)
Unrealized loss recognized in other comprehensive (loss) income, net of tax		(2,060)
Reclassification to interest expense, net		419
Balance as of September 30, 2019	$	(12,201)

Balance as of June 30, 2018	$	24
Unrealized gain recognized in other comprehensive (loss) income, net of tax		1,171
Reclassification to interest expense, net		567
Balance as of September 30, 2018	$	1,762

The following table presents the activity of cash flow hedges included in accumulated other comprehensive loss for the nine months ended September 30, 2019 and September 30, 2018:


(in thousands)	Cash Flow Hedges
Balance as of December 31, 2018	$	(2,936)
Unrealized loss recognized in other comprehensive (loss) income, net of tax		(10,135)
Reclassification to interest expense, net		870
Balance as of September 30, 2019	$	(12,201)

Balance as of December 31, 2017	$	—
Unrealized gain recognized in other comprehensive (loss) income, net of tax		251
Reclassification to interest expense, net		1,511
Balance as of September 30, 2018	$	1,762

The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018:


	As of September 30, 2019				As of December 31, 2018
(in thousands)	Assets		Liabilities		Assets		Liabilities
Derivatives designated as cash flow hedging instruments:
Accrued expenses and other current liabilities	$	—	$	3,413	$	—	$	724
Other liabilities		—		12,627		—		3,134