Note 8—Derivative Financial Instruments

We are exposed to certain risks in the normal course of our business operations. One risk relating to the variability of interest on variable rate debt is managed through the use of derivatives. All derivative financial instruments are reported in the balance sheet at fair value.

Generally, we enter into swap relationships such that changes in the fair value or cash flows of items and transactions being hedged are expected to be offset by corresponding changes in the values of the derivatives.

The Trust and the Predecessor held swaps to pay fixed/receive variable interest rates swaps with a total notional amount of $7.9 million and $25.6 million as of December 31, 2013 and 2012, respectively. Gains recognized on the interest rate swaps of $(0.2) million, $(0.1) million and $0.3 million for 2013, 2012 and 2011, respectively, and are included in the consolidated and combined statement of operations.