Derivative Financial Instruments

The following table summarizes the terms and fair values of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets, as of March 31, 2015 and December 31, 2014 (in thousands):



							Fair Value
							Liabilities ⁽²⁾
Effective Date	Maturity Date	Early Termination Date ⁽¹⁾	Notional Amount		Bank Pays Variable Rate of	Regency Pays Fixed Rate of	2015			2014
10/16/13	10/16/20	N/A	$	28,100	1 Month LIBOR	2.196%	$	(1,109	)	(764	)
8/1/15	8/1/25	2/1/16	75,000		3 Month LIBOR	2.479%	(2,543		)	(289	)
8/1/15	8/1/25	2/1/16	50,000		3 Month LIBOR	2.479%	(1,696		)	(193	)
8/1/15	8/1/25	2/1/16	50,000		3 Month LIBOR	2.479%	(1,696		)	(193	)
8/1/15	8/1/25	2/1/16	45,000		3 Month LIBOR	3.412%	(5,387		)	(3,964	)
6/15/17	6/15/27	12/15/17	20,000		3 Month LIBOR	3.488%	(1,840		)	(1,227	)
6/15/17	6/15/27	12/15/17	100,000		3 Month LIBOR	3.480%	(9,132		)	(6,080	)
6/15/17	6/15/27	12/15/17	100,000		3 Month LIBOR	3.480%	(9,132		)	(6,084	)
Total derivative financial instruments							$	(32,535	)	(18,794	)

⁽¹⁾ Represents the date specified in the agreement for either optional or mandatory early termination which will result in cash settlement.

⁽²⁾Derivatives in a liability position are included within Accounts Payable and Other Liabilities in the accompanying Consolidated Balance Sheets.

These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges. The Company has master netting agreements; however, the Company does not have multiple derivatives subject to a single master netting agreement with the same counterparties. Therefore, none are offset in the accompanying Consolidated Balance Sheet.

The Company expects to issue new debt in 2015 and 2017. In order to mitigate the risk of interest rate volatility, the Company previously entered into $220 million of forward starting interest rate swaps to partially hedge the new debt expected to be issued in 2015 and another $220 million of forward starting interest rate swaps to partially hedge the new debt expected to be issued in 2017. These interest rate swaps lock in the 10-year treasury rate and swap spread at a weighted average fixed rate of 2.67% and 3.48%, respectively. A current market based credit spread applicable to Regency will be added to the locked in fixed rate at time of issuance that will determine the final bond yield.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive income (loss) ("AOCI") and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings within interest expense.

The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements (in thousands):



Derivatives in FASB ASC Topic 815 Cash Flow Hedging Relationships:	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)					Location and Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location and Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Three months ended March 31,						Three months ended March 31,						Three months ended March 31,
	2015			2014			2015			2014			2015		2014
Interest rate swaps	$	(13,882	)	(13,800	)	Interest expense	$	(2,249	)	(2,519	)	Other expenses	$	—	—

As of March 31, 2015, the Company expects $9.1 million of net deferred losses on derivative instruments accumulated in other comprehensive income to be reclassified into earnings during the next 12 months, of which $7.8 million is related to previously settled swaps.