DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

9 Months Ended

Sep. 30, 2011

DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

NOTE 4.  DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

We are exposed to interest rate risk associated with fluctuations in the interest rates on our variable interest rate debt.  In order to manage some of the risk, we entered into an interest rate swap agreement with a notional amount of $1.4 million to effectively convert our industrial revenue bond debt from a variable rate to a fixed rate of 4.07% for five years.  This swap agreement matured on June 28, 2011 and we did not renew.  We did not use this interest rate swap for speculative purposes.  At December 31, 2010, the fair value of the swap of approximately $18,000 was recorded in other long-term liabilities.  The change in fair value of $18,000 and $20,000 for the nine month periods ended September 30, 2011 and 2010, respectively, was recorded as a component of interest expense.