DERIVATIVE INSTRUMENTS |
9 Months Ended |
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Sep. 30, 2015 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| DERIVATIVE INSTRUMENTS |
DERIVATIVE INSTRUMENTS
In 2011, the Company entered into two interest rate swap agreements maturing in December 2015 that call for the Company to pay fixed interest rates of 1.29% and 1.76% on an aggregate notional value of $25.4 million, which decreases each month by the amount of principal payments made on the note (see Note 5 for more information about the Company’s promissory notes), and receive a variable interest rate based on LIBOR on these notional values. The general purpose of these interest rate swap agreements is to provide protection against increases in interest rates, which might lead to higher interest costs for the Company. The fair value of these derivative instruments as of September 30, 2015 and December 31, 2014 was a liability of $0.1 million and $0.3 million, respectively. The Company recognized gains of $0.1 million and $0 for the three months ended September 30, 2015 and 2014, respectively, and gains of $0.2 million for each of the nine months ended September 30, 2015 and 2014. These gains are included in derivative losses, net on the condensed consolidated statements of operations.
From time to time, the Company enters into forward exchange option contracts to hedge against foreign currency payment commitments and anticipated transaction exposures. All derivatives are recognized as assets or liabilities and marked to fair value each period. The Company does not use financial instruments for trading or speculative purposes. None of the Company’s derivative instruments contain credit-risk-related contingent features, and counterparties to the derivative contracts are high credit quality financial institutions.
The Company entered into forward contracts during the second quarter of 2014 to mitigate its exposure to exchange rate fluctuations on euro-denominated aircraft purchase commitments. The Company did not designate these contracts as hedges for accounting purposes. The Company recorded a loss of $0 and $0.3 million on these derivative instruments during the three and nine months ended September 30, 2015, respectively. This loss is recorded in foreign currency gains (losses), net in the condensed consolidated statements of operations. The Company had no open forward contracts as of September 30, 2015.
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