Derivative Instruments And Hedging Activities

6 Months Ended

Jun. 30, 2011

Derivative Instruments And Hedging Activities

Derivative Instruments And Hedging Activities

10.  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to certain risks relating to its ongoing business operations.  From time to time, the Company may use derivative instruments to manage interest rate risk.  Interest rate swaps have been entered into in prior periods to manage interest rate risk associated with the Company's variable-rate borrowings.  The Company had an interest rate swap outstanding with a notional amount of $57,500,000, which expired on December 22, 2010.  The Company designated this interest rate swap as a cash flow hedge at inception. 

On February 1, 2010, the Company sold the majority of the assets of the Processed Metal Products business as disclosed in Note 15 of the consolidated financial statements.  The Company used the proceeds from the sale together with cash generated from operations to repay all remaining variable-rate debt during the three months ended March 31, 2010.  Accordingly, all losses previously deferred in accumulated other comprehensive loss related to the interest rate swap were reclassified to interest expense during the three months ended March 31, 2010.  Changes in the fair value of the swap continued to be recorded in earnings until the swap expired. 

As noted above, all losses reported as a component of accumulated other comprehensive loss related to the interest rate swap were reclassified into earnings as interest expense during the three months ended March 31, 2010.  Additionally, changes in the fair value of the interest rate swap were recorded in current earnings as interest expense or income during the three and six months ended June 30, 2010.

The following table summarizes the gains and losses recorded in interest expense and other comprehensive income as a result of the interest rate swap for the three and six months ended June 30 (in thousands):

		Three Months Ended June 30,				Six Months Ended June 30,
		2011		2010		2011		2010
Adjustments to interest expense:
Loss reclassified from accumulated other comprehensive income	$	-	$	-	$	-	$	1,899
(Gain) loss from changes in the fair value of the ineffective portion of the interest rate swap		-		(18)		-		116
Total (gain) loss included in interest expense	$	-	$	(18)	$	-	$	2,015
Adjustments to other comprehensive income:
Realized loss reclassified to interest expense, net of taxes	$	-	$	-	$	-	$	302
Unrealized loss reclassified to interest expense, net of taxes		-		-		-		904
Gain included in other comprehensive income	$	-	$	-	$	-	$	1,206