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Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2012
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. Level 2 inputs are inputs, other than quoted prices in active markets for identical asset or liabilities, that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.
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 (market approach). 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, 2012 and December 31, 2011:
 
(Level 2)
 
Total Liabilities as of
June 30, 2012

Interest rate swap liabilities
$
276,000

 
$
276,000

 
(Level 2)
 
Total Liabilities as of
December 31, 2011

Interest rate swap liabilities
$
331,000

 
$
331,000


There were no non-recurring fair value measurements for the six months ended June 30, 2012.

Core Molding Technologies' derivative instruments included on the Consolidated Balance Sheets were as follows:
 
Balance Sheet
Location
 
June 30,
2012 Fair Value

 
December 31,
2011 Fair Value

Derivatives not designated as hedging instruments Interest rate risk activities
Interest rate swaps
 
$
276,000

 
$
331,000


The effect of derivative instruments on the Consolidated Statements of Income was as follows:
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
 
 
 
June 30,
2012
 
June 30,
2011
Interest rate swaps
 
Interest expense
 
$
2,000

 
$
(65,000
)
Six months ended
 
 
 
 
 
 
Interest rate swaps
 
Interest expense
 
$
14,000

 
$
(1,000
)

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 Income, 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 $67,000, or $44,000 net of taxes.