On March 21, 2008, we entered into a pay-fixed, receive-variable interest rate swap agreement with Bank of America related to $10.0 million of our $14 million term loan secured by plant, pipeline and equipment. The effective date of the interest rate swap agreement is August 15, 2008, and terminates on December 15, 2017. The notional amount of the interest rate swap was $3.75 million at June 30, 2014. South Hampton receives credit for payments of variable interest made on the term loan’s variable rates, which are based upon LIBOR, and pays Bank of America an interest rate of 5.83% less the credit on the interest rate swap. We have designated the transaction as a cash flow hedge. Beginning on August 15, 2008, the derivative instrument was reported at fair value with any changes in fair value reported within other comprehensive income (loss) in the Company’s Statement of Comprehensive Income. We entered into the interest rate swap to minimize the effect of changes in the LIBOR rate. The following tables detail (in thousands) the impact the agreement had on the financial statements:
| |
|
June 30, |
|
| |
|
2014 |
|
|
2013 |
|
Other Comprehensive Loss |
|
|
|
|
|
|
Cumulative loss |
|
$ |
(466 |
) |
|
$ |
(696 |
) |
Deferred tax benefit |
|
|
163 |
|
|
|
243 |
|
Net cumulative loss |
|
$ |
(303 |
) |
|
$ |
(453 |
) |
| |
|
|
|
|
|
|
|
|
Interest expense reclassified from other comprehensive loss |
|
$ |
130 |
|
|
$ |
158 |
|