FAIR VALUE

9 Months Ended

Sep. 30, 2011

FAIR VALUE

FAIR VALUE

NOTE 18 - FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).  The following hierarchy is used to classify the inputs used to measure fair value:

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
Level 3	Unobservable inputs for the asset or liability.

The following table provides a summary of assets and liabilities as of September 30, 2011 measured at fair value on a recurring basis:

Description	Balance as of September 30, 2011		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Foreign exchange contracts	$	3,243	$	—	$	3,243	$	—
Commodity contracts	3,195		—		3,195		—
Total assets	$	6,438	$	—	$	6,438	$	—
Liabilities:
Foreign exchange contracts	$	1,768	$	—	$	1,768	$	—
Contingent consideration	4,153		—		—		4,153
Deferred compensation	14,316		—		14,316		—
Total liabilities	$	20,237	$	—	$	16,084	$	4,153

The following table provides a summary of assets and liabilities as of December 31, 2010 measured at fair value on a recurring basis:

Description	Balance as of December 31, 2010		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Foreign exchange contracts	$	633	$	—	$	633	$	—
Liabilities:
Foreign exchange contracts	$	1,956	$	—	$	1,956	$	—
Commodity contracts	1,051		—		1,051		—
Deferred compensation	14,380		—		14,380		—
Total liabilities	$	17,387	$	—	$	17,387	$	—

The Company’s derivative contracts are valued at fair value using the market approach.  The Company measures the fair value of foreign exchange contracts using Level 2 inputs based on observable spot and forward rates in active markets.  The Company measures the fair value of commodity contracts using Level 2 inputs through observable market transactions in active markets provided by financial institutions.  During the quarter ended September 30, 2011, there were no transfers between Levels 1, 2 or 3.

In connection with the Arc Products acquisition, the Company recorded contingent consideration fair valued at $3,806 at January 31, 2011 and $4,153 at September 30, 2011, reflecting $347 of non-cash accretion.  The contingent consideration is based upon estimated sales for the five-year period ending December 31, 2015 and will be paid in 2016 based on actual sales during the five-year period.  The fair value of the contingent consideration is considered a Level 3 valuation and is estimated using a probability weighted discounted cash flow analysis.

The deferred compensation liability is the Company’s liability under its executive deferred compensation plan.  The Company measures the fair value of the liability using the net asset values of the participants’ underlying investment fund elections.

The fair value of “Cash and cash equivalents,” “Accounts receivable,” “Amounts due banks” and “Trade accounts payable” approximated book value due to the short-term nature of these instruments at both September 30, 2011 and December 31, 2010.  The fair value of long-term debt at September 30, 2011 and December 31, 2010, including the current portion, was approximately $83,682 and $88,120, respectively, which was determined using available market information and methodologies requiring judgment.  The carrying value of this debt at such dates was $83,486 and $86,422, respectively.  Since considerable judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount that could be realized in a current market exchange.