Derivative Financial Instruments

12 Months Ended

Dec. 31, 2015

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

(12) Derivative Financial Instruments

From time to time, the Company may enter into interest rate swaps in an attempt to achieve a more balanced debt portfolio between fixed and variable debt.  The Company does not use derivative financial instruments for trading or speculative purposes. 

The Company has three interest rate swaps for notional amounts of $100 million each related to its 7 1/8% senior notes maturing in December 2021.  These transactions are designated as fair value hedges since the swaps hedge against the change in fair value of fixed rate debt resulting from changes in interest rates.  The Company recorded a derivative asset of $6.9 million and $4.2 million within intangible and other long term assets in the consolidated balance sheets as of December 31, 2015 and 2014, respectively, relating to these swaps. 

The changes in fair value of the interest rate swaps are included in the adjustments to reconcile net income/loss to net cash provided by operating activities in the consolidated statements of cash flows. The location and effect of the derivative instrument on the consolidated statements of operations presented on a pre-tax basis is as follows (in thousands):  

		Years Ended December 31,
Effect of derivative instrument	Location of (gain) loss  recognized	2015		2014		2013
Interest rate swap	Interest expense, net	$	(1,932)	$	(11,054)	$	13,079
Hedged item - debt	Interest expense, net		(790)		7,208		(12,303)
		$	(2,722)	$	(3,846)	$	776

During 2015, 2014 and 2013, $2.7 million of interest income, $3.8 million of interest income and $0.8 million of interest expense, respectively, was related to the ineffectiveness associated with these fair value hedges.  Hedge ineffectiveness represents the difference between the changes in fair value of the derivative instruments and the changes in fair value of the fixed rate debt attributable to changes in the benchmark interest rate.