XML 30 R16.htm IDEA: XBRL DOCUMENT v2.3.0.15
Fair Value of Financial Instruments
9 Months Ended
Sep. 30, 2011
Fair Value Disclosures [Abstract] 
Fair Value of Financial Instruments
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 September 30, 2011 and December 31, 2010:
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total Liabilities as of
September 30, 2011

Interest rate swap liabilities
$
—

 
$
377,344

 
$
—

 
$
377,344

 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total Liabilities as of
December 31, 2010

Interest rate swap liabilities
$
—

 
$
350,916

 
$
—

 
$
350,916

There were no non-recurring fair value measurements for the nine months ended September 30, 2011.
Core Molding Technologies' derivative instruments included on the Consolidated Balance Sheets were as follows:
 
Balance Sheet
Location
 
September 30,
2011 Fair Value

 
December 31,
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
 
377,344

 
350,594

Total
 
 
$
377,344

 
$
350,916

The effect of derivative instruments on the Consolidated Statements of Operations was as follows:
Derivatives in Cash Flow Hedging Relationships
Derivatives in Cash Flow Hedging Relationships
 
Amount of Gain (Loss)
Recognized in OCI on
Derivative (Effective Portion)
 
Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
 
Amount of Gain (Loss)
Reclassified from AOCI into
Expense (Effective Portion)
Three months ended
 
September 30,
2011
 
September 30,
2010
 
 
 
September 30,
2011
 
September 30,
2010
Interest rate swaps
 
$
—

 
$
(5,377
)
 
Interest expense, net
 
$
—

 
$
4,717

Nine months ended
 
September 30,
2011
 
September 30,
2010
 
 
 
September 30,
2011
 
September 30,
2010
Interest rate swaps
 
$
322

 
$
(24,344
)
 
Interest expense, net
 
$
—

 
$
22,589

Derivatives not designated as hedging instruments
Derivatives Not Designated as Hedging Instruments
 
Location of Gain (Loss)
Recognized
in Income on Derivative
 
Amount of Realized/Unrealized Gain
(Loss) Recognized in Income on
Derivatives
Three months ended
 
 
 
September 30,
2011
 
September 30,
2010
Interest rate swaps
 
Interest income (expense)
 
$
73,625

 
$
113,254

Nine months ended
 
 
 
 
 
 
Interest rate swaps
 
Interest income (expense)
 
$
88,510

 
$
380,739

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 $82,347, or $54,350 net of taxes.