XML 30 R16.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2011
Fair Value of Financial Instruments [Abstract]  
Fair Value of Financial Instruments
9. Fair Value of Financial Instruments
The Company’s financial instruments consist of long-term debt, interest rate swaps, accounts receivable, and accounts payable. The carrying amount of these financial instruments approximated their fair value.
To increase consistency and comparability in fair value measurements, this standard establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy disclosed is based on the lowest level of input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:
  •  
Level 1 inputs are quoted prices (unadjusted) in active markets for identical asset or liabilities that the company has the ability to access as of the reporting date.
 
  •  
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.
 
  •  
Level 3 inputs are unobservable inputs, such as internally developed pricing models for the asset or liability due to little or no market activity for the asset or liability.
The Company has two Level 2 fair value measurements all of which relate to the Company’s interest rate swaps. The Company utilizes interest rate swap contracts to manage its targeted mix of fixed and floating rate debt, and these swaps are valued using observable benchmark rates at commonly quoted intervals for the full term of the swaps. These interest rate swaps are discussed in detail in Note 6.
The following table presents financial liabilities measured and recorded at fair value on the Company’s Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy as of June 30, 2011 and December 31, 2010:
                                 
                            Total Liabilities as of  
    (Level 1)     (Level 2)     (Level 3)     June 30, 2011  
 
                               
Interest rate swap liabilities
  $ —     $ 324,305     $ —     $ 324,305  
                                 
                            Total Liabilities as of  
    (Level 1)     (Level 2)     (Level 3)     December 31, 2010  
 
 
Interest rate swap liabilities
  $ —     $ 350,916     $ —     $ 350,916  
There were no non-recurring fair value measurements for the six months ended June 30, 2011.
Core Molding Technologies derivative instruments included on the Consolidated Balance Sheets were as follows:
                         
    Balance Sheet   June 30,     December 31,  
    Location   2011 Fair Value     2010 Fair Value  
Derivatives designated as hedging instruments Interest rate
risk activities
  Interest rate swaps   $ —     $ 322  
 
                       
Derivatives not designated as hedging instruments Interest rate risk activities
  Interest rate swaps     324,305       350,594  
 
                   
 
                       
Total
          $ 324,305     $ 350,916  
 
                   
The effect of derivative instruments on the Consolidated Statements of Operations was as follows:
Derivatives in Cash Flow Hedging Relationships
                                         
                    Location of Gain      
                    (Loss) Reclassified      
Derivatives in Cash   Amount of Gain (Loss)     from AOCI into   Amount of Gain (Loss)  
Flow Hedging   Recognized in OCI on     Income   Reclassified from AOCI into  
Relationships   Derivative (Effective Portion)     (Effective Portion)   Expense (Effective Portion)  
    June 30,     June 30,             June 30,     June 30,  
Three months ended   2011     2010             2011     2010  
Interest rate swaps
  $ —     $ 8,662     Interest expense, net   $ —     $ (7,499 )
 
                                       
 
  June 30,     June 30,             June 30,     June 30,  
Six months ended
  2011     2010             2011     2010  
Interest rate swaps
  $ 322     $ 18,967     Interest expense, net   $ —     $ (17,872 )
Derivatives not designated as hedging instruments
                         
    Location of Gain (Loss)   Amount of Realized/Unrealized Gain  
Derivatives Not Designated as   Recognized   (Loss) Recognized in Income on  
Hedging Instruments   in Income on Derivative   Derivatives  
            June 30,     June 30,  
Three months ended           2011     2010  
Interest rate swaps
  Interest income (expense)   $ (64,499 )   $ (170,686 )
 
 
          June 30,     June 30,  
Six months ended
          2011     2010  
Interest rate swaps
  Interest income (expense)   $ (886 )   $ (267,485 )
As discussed in Note 6, the Company discontinued the use of hedge accounting for its two interest rate swaps, effective March 31, 2009 for the Capex swap and January 1, 2010 for the IDRB swap. The Company now records all mark to market adjustments related to these interest rate swaps within interest expense in the Company’s Consolidated Statements of Operations, since the date the Company discontinued hedge accounting for each swap. It is anticipated that during the next twelve months the expiration and settlement of cash flow hedge contracts along with the amortization of losses on discontinued hedges will result in income statement recognition of amounts currently classified in accumulated other comprehensive loss of approximately $54,350, net of taxes.