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Note 13 - Derivative Instruments
12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
13.
         DERIVATIVE INSTRUMENTS
 
We engage in activities that expose us to market risks, including the effects of changes in fuel prices and in interest rates. Financial exposures are evaluated as an integral part of our risk management program, which seeks, from time-to-time, to reduce the potentially adverse effects that the volatility of fuel markets and interest rate risk
may
have on operating results.
 
In an effort to seek to reduce the variability of the ultimate cash flows associated with fluctuations in diesel fuel prices, we periodically enter into various derivative instruments, including forward futures swap contracts (which we refer to as "fuel hedging contracts"). Historically diesel fuel has not been a traded commodity on the futures market so heating oil has been used as a substitute, as prices for both generally move in similar directions. Recently, however, we have been able to enter into hedging contracts with respect to both heating oil and ultra-low sulfur diesel (
"ULSD
"). Under these contracts, we pay a fixed rate per gallon of heating oil or ULSD and receive the monthly average price of New York heating oil per the New York Mercantile Exchange ("NYMEX") and Gulf Coast ULSD, respectively. The retrospective and prospective regression analyses provided that changes in the prices of diesel fuel and heating oil and diesel fuel and ULSD were each deemed to be highly effective based on the relevant authoritative guidance except for a small portion of our hedging contracts, which we determined to be ineffective on a prospective basis in
2014
and
2015.
Consequently, we recognized a reduction in fuel expense of
$1.4
million in
2015
to mark the related liability to market. At
December
31,
2016
and
2015,
there were no remaining ineffective fuel hedge contracts and, thus, all remaining fuel hedge contracts continue to qualify as cash flow hedges. We do not engage in speculative transactions, nor do we hold or issue financial instruments for trading purposes
.
 
In
August
2015,
we entered into an interest rate swap agreement with a notional amount of
$28.0
million, which was designated as a hedge against the variability in future interest payments due on the debt associated with the purchase of our corporate headquarters. The terms of the swap agreement effectively convert the variable rate interest payments on this note to a fixed rate of
4.2%
through maturity on
August
1,
2035.
In
2016,
we also entered into several interest rate swaps, which were designated to hedge against the variability in future interest rate payments due on rent associated with the purchase of certain trailers. Because the critical terms of the swap and hedged item coincide, in accordance with the requirements of ASC
815,
the change in the fair value of the derivative is expected to exactly offset changes in the expected cash flows due to fluctuations in the LIBOR rate over the term of the debt instrument, and therefore no ongoing assessment of effectiveness is required. The fair value of the swap agreements that were in effect at
December
31,
2016
and
2015,
of approximately
$0.7
million and
$1.1
million, respectively, is included in other liabilities in the consolidated balance sheet, and is included in accumulated other comprehensive loss, net of tax. Additionally,
$0.6
million and
$0.3
million was reclassified from accumulated other comprehensive loss into our results of operations as additional interest expense for the year ended
December
31,
2016
and
2015,
respectively, related to changes in interest rates during such periods. Based on the amounts in accumulated other comprehensive loss as of
December
31,
2016,
we expect to reclassify losses of approximately
$0.3
million, net of tax, on derivative instruments from accumulated other comprehensive loss into our results of operations during the next
twelve
months due to changes in interest rates. The amounts actually realized will depend on the fair values as of the date of settlement.
 
We recognize all derivative instruments at fair value on our consolidated balance sheets. Our derivative instruments are designated as cash flow hedges, thus the effective portion of the gain or loss on the derivatives is reported as a component of accumulated other comprehensive loss and will be reclassified into earnings in the same period during which the hedged transaction affects earnings. The effective portion of the derivative represents the change in fair value of the hedge that offsets the change in fair value of the hedged item. To the extent the change in the fair value of the hedge does not perfectly offset the change in the fair value of the hedged item, the ineffective portion of the hedge is immediately recognized in our consolidated statements of operations. Ineffectiveness is calculated using the cumulative dollar offset method as an estimate of the difference in the expected cash flows of the respective fuel hedge contracts (heating oil or ULSD) compared to the changes in the all-in cash outflows required for the diesel fuel purchases.
 
At
December
31,
2016,
we had fuel hedge contracts on approximately
12.1
million and
7.6
million gallons of diesel to be purchased in
2017
and
2018,
respectively, or approximately
27%
and
17%
of our projected annual
2017
and
2018
fuel requirements, respectively.
 
The fair value of the fuel hedge contracts that were in effect at
December
31,
2016
and
2015,
of approximately
$3.6
million and
$27.3
million, respectively, are included in other liabilities in the consolidated balance sheet, are included in accumulated other comprehensive loss, net of tax. 
Changes in the fair values of these instruments can vary dramatically based on changes in the underlying commodity prices. For example, during 
2016,
market "spot" prices for ultra-low sulfur diesel peaked at a high of approximately
$1.66
 per gallon and hit a low price of approximately
$0.83
 per gallon. During 
2015,
market spot prices ranged from a high of
$1.98
 per gallon to a low of
$0.98
 per gallon. Market price changes can be driven by factors such as supply and demand, inventory levels, weather events, refinery capacity, political agendas, the value of the U.S. dollar, geopolitical events, and general economic conditions, among other items.
 
Additionally,
$16.7
million,
$15.3
million, and
$3.1
million were reclassified from accumulated other comprehensive loss into our results of operations for the years ended
December
31,
2016,
2015,
and
2014,
respectively, as additional fuel expense for
2016,
2015,
and
2014,
related to losses on fuel hedge contracts that expired. In addition to the amounts reclassified as a result of expired contracts, in
2105
we recognized a reduction of fuel expense of
$1.4
million relating to previously recognized fuel expense as a result of the expiration of the fuel hedge contracts for which the fuel hedging relationship was deemed to be ineffective on a prospective basis in
2014.
As a result, the changes in fair value for those contracts were recorded as expense rather than as a component of other comprehensive loss. At
December
31,
2016,
all fuel hedge contracts were determined to be effective.
 
Based on the amounts in accumulated other comprehensive loss as of
December
31,
2016
and the expected timing of the purchases of the diesel hedged, we expect to reclassify approximately
$1.8
million, net of tax, on derivative instruments from accumulated other comprehensive loss into our results of operations during the next year due to the actual diesel fuel purchases.  The amounts actually realized will be dependent on the fair values as of the date of settlement.
 
We perform both a prospective and retrospective assessment of the effectiveness of our hedge contracts at inception and quarterly, including assessing the possibility of counterparty default.  If we determine that a derivative is no longer expected to be highly effective, we discontinue hedge accounting prospectively and recognize subsequent changes in the fair value of the hedge in earnings.  As a result of our effectiveness assessment at inception, quarterly, and at
December
31,
2016
and
2015,
we believe our hedge contracts have been and will continue to be highly effective in offsetting changes in cash flows attributable to the hedged risk, with the exception of the abovementioned contracts.
 
Outstanding financial derivative instruments expose us to credit loss in the event of nonperformance by the counterparties to the agreements. We do not expect any of the counterparties to fail to meet their obligations.  Our credit exposure related to these financial instruments is represented by the fair value of contracts reported as assets.  To manage credit risk, we review each counterparty's audited financial statements, credit ratings, and/or obtain references as we deem necessary.