Annual report pursuant to Section 13 and 15(d)

Fair Value of Financial Instruments

v2.4.0.6
Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2011
Fair Value of Financial Instruments [Abstract]  
Fair Value of Financial Instruments

Note 8 — Fair Value of Financial Instruments

Certain of our assets and liabilities are required to be measured at fair value on a recurring basis. For purposes of recording fair value adjustments for certain financial and non-financial assets and liabilities, and determining fair value disclosures, we estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability.

The fair value measurement and disclosure requirements of FASB Accounting Standards Codification Topic No. 820, Fair Value Measurement and Disclosures (ASC 820) requires inputs that we categorize using a three-level hierarchy, from highest to lowest level of observable inputs, as follows:

Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets

Level 2 — Direct or indirect observable inputs, including quoted prices or other market data, for similar assets or liabilities in active markets or identical assets or liabilities in less active markets and

Level 3 — Unobservable inputs that require significant judgment for which there is little or no market data.

When multiple input levels are required for a valuation, we categorize the entire fair value measurement according to the lowest level of input that is significant to the measurement even though we may have also utilized significant inputs that are more readily observable. The amounts reported in our consolidated balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value. The carrying amount of our interest rate swap agreements represents the estimated fair value, measured using Level 2. At December 31, 2011, the carrying amount of our interest rate swap agreements was a liability of $0.1 million, recorded in other long-term liabilities on our consolidated balance sheets. We did not have any outstanding derivative instruments as of December 31, 2010.

Fair value of our debt instruments is determined using Level 2 inputs. Fair values and related carrying values of our debt instruments are as follows:

 

                                 
    December 31, 2011     December 31, 2010  
    Carrying Amount     Fair Value     Carrying Amount     Fair Value  
    (in thousands)  

Long-term Debt

                                

9.125% Notes

   $ 300,000     $ 315,000     $ 300,000     $ 314,300  

2.125% Notes

     125,000       123,204       125,000       119,400  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 425,000     $ 438,204     $ 425,000     $ 433,700  
   

 

 

    

 

 

    

 

 

    

 

 

  

As discussed in Note 2, in accordance with the Impairment or disposal of long-lived assets subsections of ASC 360-10, Property, Plant and Equipment, during the fourth quarter of 2011, our AADU assets with a carrying value of $339.5 million were written down to their fair value of $169.5 million, resulting in a pretax non-cash charge of $170.0 million which is included in earnings for the period. The fair value was based on expected future cash flows using Level 3 inputs.

 

The following table summarizes the fair value measurements of assets measured at fair value on a nonrecurring basis subsequent to their initial recognition during the year ended December 31, 2011:

 

                                         
          Fair Value Measurements Using        

Description

   Year ended
December 31, 2011		     Quoted Prices in
Active  Markets for
Identical Assets
(Level 1) 		    Significant Other
Observable  Inputs
(Level 2) 		    Significant
Unobservable
Inputs
(Level 3) 		    Total  Gains
(Losses) 		 
          (in millions)              

Long-lived assets held and used

   $   169.5     $         —     $         —     $   169.5     $ (170.0 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 169.5     $ —     $ —     $ 169.5     $ (170.0 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Market conditions could cause an instrument to be reclassified from Level 1 to Level 2, or Level 2 to Level 3. There were no transfers between levels of the fair value hierarchy or any changes in the valuation techniques used during the year ended December 31, 2011.