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Derivative Instruments
 12 Months Ended
Dec. 31, 2011
Derivative Instruments [Abstract]  
Derivative Instruments
10. Derivative Instruments:

During 2010 and 2011, the Company entered into nickel swaps indexed to the LME price of nickel with a third-party broker, MF Global. The Company entered into swaps to mitigate the risk of volatility in the price of nickel. On November 1, 2011 MF Global filed for bankruptcy and all related contracts were cancelled. The outstanding liability of $55 that we have to MF Global has been included in “Other accrued liabilities” in the Consolidated Balance Sheet at December 31, 2011.

CTI entered into an interest rate swap to reduce the impact of changes in interest rates on its IRB. The swap agreement matures in April 2018, the same time as the IRB, but is reduced annually by the amount of the principal payments on the IRB. The Company is exposed to credit loss in the event of nonperformance by the other parties to the interest rate swap agreement. However, the Company does not anticipate nonperformance by the counterparties. The interest rate swap is not treated as a hedge for accounting purposes.

While these derivatives are intended to help the Company manage risk, they have not been designated as hedging instruments. The periodic changes in fair value of the nickel and embedded customer derivative instruments are included in “Cost of materials sold” in the Consolidated Statements of Operations. We recognize derivative positions with both the customer and the third party for the derivatives and we classify cash settlement amounts associated with them as part of “Cost of materials sold” in the Consolidated Statements of Operations. The periodic changes in fair value of the interest rate swap are included in “Other income and expense, net” in the Consolidated Statements of Operations. Cash settlement amounts associated with the interest rate swap are included in “Interest and other expense on debt” in the Consolidated Statements of Operations.

The embedded customer derivatives are included in “Accounts receivable, net”, and the nickel and interest rate swaps are included in “Other accrued liabilities” and “Other long-term liabilities” on the Consolidated Balance Sheets at December 31, 2011 and December 31, 2010.

 

As of December 31, 2011, we had $55 of net derivative losses that we had not yet settled under an embedded customer derivative agreement. Settlement of these assets is expected to occur during the first quarter of 2012. There was no net impact from the nickel swaps or embedded customer derivative agreements to the Company’s Consolidated Statement of Operations for the twelve months ended December 31, 2011 or 2010. The table below shows the total impact to the Company’s Consolidated Statements of Operations of the derivatives for the year ended December 31, 2011 and 2010.

 

                 
    Net Gain (Loss) Recognized  
    2011     2010  
     

Interest rate swap

   $ (68 )    $ —    

Nickel swaps

     (208 )      55  

Embedded customer derivatives

     208       (55 ) 
   

 

 

    

 

 

  

Total

   $ (68 )    $ —