Fair Value Measurements

6 Months Ended

Jun. 28, 2015

Fair Value Measurements

Fair Value Measurements

NOTE 14 — Fair Value Measurements

CTS uses interest rate swaps to convert the line of credit’s variable rate of interest into a fixed rate. The interest rate swaps are measured at fair value on a recurring basis.  The table below summarizes CTS’ financial liability that was measured at fair value as of three month period June 28, 2015 and the loss recorded during the six month period ended June 28, 2015:  

			Quoted
			Prices
			in Active		Significant
	Carrying		Markets for		Other		Significant		Loss for
	Value at		Identical		Observable		Unobservable		Six Months Ended
	June 28,		Instruments		Inputs		Inputs		June 28,
($ in thousands)	2015		(Level 1)		(Level 2)		(Level 3)		2015
Interest rate swap – cash flow hedge	$	1,047	$	—	$	1,047	$	—	$	27

The table below summarizes the financial liability that was measured at fair value on a recurring basis as of December 31, 2014 and the loss recorded during the year ended December 31, 2014:

			Quoted
			Prices
			in Active		Significant
	Carrying		Markets for		Other		Significant		Loss for
	Value at		Identical		Observable		Unobservable		Year Ended
	December 31,		Instruments		Inputs		Inputs		December 31,
($ in thousands)	2014		(Level 1)		(Level 2)		(Level 3)		2014
Interest rate swap – cash flow hedge	$	1,020	$	—	$	1,020	$	—	$	488

The fair value of CTS’ interest rate swaps were measured using a market approach which uses current industry information. There is a readily determinable market and these swaps are classified within level 2 of the fair value hierarchy.

The table below provides a reconciliation of the recurring financial liability related to interest rate swaps:

	Interest
($ in thousands)	Rate Swaps
Balance at January 1, 2014	$	(998)
Total gains (losses) for the period:
Included in earnings		488
Included in other comprehensive earnings		(510)
Balance at December 31, 2014	$	(1,020)
Total gains (losses) for the period:
Included in earnings		382
Included in other comprehensive earnings		(409)
Balance at June 28, 2015	$	(1,047)

CTS’ long-term debt consists of a revolving credit facility which is recorded at its carrying value. There is a readily determinable market for CTS’ revolving credit debt and it is classified within Level 2 of the fair value hierarchy as the market is not deemed to be active. The fair value of long-term debt was measured using a market approach which uses current industry information and approximates carrying value.