Derivatives and Hedging

The fair value of all our interest rate swap contracts was reported as follows (in thousands):



	Assets			Liabilities
	Balance Sheet Location	Amount		Balance Sheet Location	Amount
Designated Hedges:
September 30, 2017	Other Assets, net	$	835	Other Liabilities, net	$	—
December 31, 2016	Other Assets, net	126		Other Liabilities, net	—

The gross presentation, the effects of offsetting for derivatives with the right to offset under master netting agreements and the net presentation of our interest rate swap contracts is as follows (in thousands):



							Gross Amounts Not Offset in Balance Sheet
	Gross Amounts Recognized		Gross Amounts Offset in Balance Sheet		Net Amounts Presented in Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
September 30, 2017
Assets	$	835	$	—	$	835	$	—	$	—	$	835

December 31, 2016
Assets	126		—		126		—		—		126

Cash Flow Hedges

As of September 30, 2017 and December 31, 2016, we had three interest rate swap contracts, maturing through March 2020, with an aggregate notional amount of $200 million that were designated as cash flow hedges and fix the LIBOR component of the interest rates at 1.5%. We have determined that these contracts are highly effective in offsetting future variable interest cash flows.

During 2016, we entered into and settled a forward-starting interest rate swap contract with an aggregate notional amount of $200 million hedging future fixed-rate debt issuances, which fixed the 10-year swap rates at 1.5% per annum. Upon settlement of this contract in August 2016, we paid $2.1 million resulting in a loss of $2.0 million in accumulated other comprehensive loss.

As of both September 30, 2017 and December 31, 2016, the net gain balance in accumulated other comprehensive loss relating to active and previously terminated cash flow interest rate swap contracts was $6.4 million, which will be reclassified to net interest expense as interest payments are made on the originally hedged debt. Within the next 12 months, approximately $.8 million in accumulated other comprehensive loss is expected to be reclassified as a reduction to interest expense related to our interest rate contracts.

A summary of cash flow interest rate swap contract hedging activity is as follows (in thousands):



Derivatives in Cash Flow Hedging Relationships	Amount of (Gain) Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)			Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)			Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Three Months Ended September 30, 2017	$	(77	)	Interest expense, net	$	90		Interest expense, net	$	—
Nine Months Ended September 30, 2017	29			Interest expense, net	(74		)	Interest expense, net	—
Three Months Ended September 30, 2016	(1,568		)	Interest expense, net	(366		)	Interest expense, net	(96		)
Nine Months Ended September 30, 2016	7,003			Interest expense, net	(1,097		)	Interest expense, net	(96		)

Fair Value Hedges

Associated with the refinancing of a secured note, on June 24, 2016, we terminated two interest rate swap contracts that were designated as fair value hedges and had an aggregate notional amount of $62.9 million. Upon settlement, we received $2.2 million, which was recognized as part of the gain on extinguishment of debt related to the hedged debt.

A summary of fair value interest rate swap contract hedging activity is as follows (in thousands):



	Gain (Loss) on Contracts			Gain (Loss) on Borrowings		Net Settlements and Accruals on Contracts ^{(1) (3)}		Amount of Gain (Loss) Recognized in Income ^{(2) (3)}
Nine Months Ended September 30, 2016
Interest expense, net	$	(418	)	$	418	$	3,140	$	3,140

_______________


(1)	Amounts in this caption include gain (loss) recognized in income on derivatives and net cash settlements.


(2)	No ineffectiveness was recognized during the respective periods.


(3)	Included in each caption for the nine months ended September 30, 2016 is $2.2 million received upon the termination of two interest rate swap contracts.