Note 6—Derivatives

We are directly and indirectly affected by changes in interest rates, which may adversely impact our financial performance and are referred to as “market risks.” When deemed appropriate, we use derivatives as a risk management tool to mitigate the potential impact of certain market risks. We do not enter into derivative financial instruments for trading purposes.

We voluntarily terminated our interest rate swap in May 2026, which resulted in a cash receipt of $1.4 million, net of fees and the removal of the derivative asset from our condensed consolidated balance sheet. At the time of the termination, the total amount of gain deferred in accumulated other comprehensive income (AOCI) related to the terminated interest rate swap was $1.5 million which will be reclassified into earnings as an adjustment to interest expense, net when the originally hedged interest payments affect earnings. We expect the full AOCI derivative amount to be reclassified into earnings through March 2027.

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The following table summarizes the terms and fair value of our outstanding cash flow hedge as of December 31, 2025:

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The following table summarizes the effect of cash flow hedge accounting on our condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025:

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The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.