Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

11. Fair Value Measurements

     The carrying values of cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximated their fair value due to the short-term nature of these instruments.

Recurring

     The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis at (in thousands):

	September 30, 2012								December 31, 2011
		Total		Level 1	Level 2			Level 3		Total		Level 1		Level 2		Level 3
Assets
Deferred compensation	$	4,248	$	4,248	$	-	$	-	$	2,564	$	2,564	$	-	$	-
Unrealized gain on
derivative instruments		362		-		362		-		-		-		-		-
Total assets	$	4,610	$	4,248	$	362	$	-	$	2,564	$	2,564	$	-	$	-
Liabilities
Contingent consideration
related to acquisitions	$	12,636	$	-	$	-	$	12,636	$	14,561	$	-	$	-	$	14,561
Deferred compensation		6,607		6,607		-		-		4,468		4,468		-		-
Unrealized loss on
derivative instruments		-		-		-		-		436		-		436		-
Total liabilities	$	19,243	$	6,607	$	-	$	12,636	$	19,465	$	4,468	$	436	$	14,561

Deferred Compensation

     The Company has an Executive Non-Qualified Deferred Compensation Plan (the "Plan"). The amounts deferred under this Plan are credited with earnings or losses based upon changes in values of the notional investments elected by the Plan participants. Deferred compensation assets and liabilities were valued using a market approach based on the quoted market prices of identical instruments.

Contingent Consideration Related to Acquisitions

     Liabilities for contingent consideration related to acquisitions were valued using management's projections for long-term sales forecasts, including assumptions regarding market share gains and future industry-specific economic and market conditions, and a market participant's weighted average cost of capital. Over the next five years, the Company's long-term sales growth forecasts for products subject to contingent consideration arrangements average approximately 40 percent per year. For further information on the inputs used in determining the fair value, and a roll-forward of the contingent consideration liability, see Note 10 of the Notes to Condensed Consolidated Financial Statements.

     Changes in either of the inputs in isolation would result in a change in the fair value measurement. A change in the assumptions used for sales forecasts would result in a directionally similar change in the fair value liability, while a change in the weighted average cost of capital would result in a directionally opposite change in the fair value liability. If there is an increase in the fair value liability, the Company would record a charge to selling, general and administrative expenses, and if there is a decrease in the fair value liability, the Company would record a benefit in selling, general and administrative expenses.

Derivative Instruments

     At September 30, 2012, the Company had derivative instruments for 7.1 million pounds of aluminum, approximately 20 percent of the Company's anticipated annual aluminum purchases, in order to manage a portion of the exposure to movements associated with aluminum costs. These derivative instruments expire between October 2012 and September 2013, at an average mid-west aluminum price of $1.02 per pound. While these derivative instruments are considered to be economic hedges of the underlying movement in the price of aluminum, they are not designated or accounted for as a hedge. These derivative instruments were valued at fair value using a market approach based on the quoted market prices of similar instruments at the end of each reporting period, and the resulting net gain or loss was recorded in cost of sales in the Condensed Consolidated Statements of Income. At September 30, 2012 the corresponding asset was recorded in prepaid expenses and other current assets, and at December 31, 2011 the corresponding liability was recorded in accrued expenses and other current liabilities, both as reflected in the Condensed Consolidated Balance Sheet. During the first nine months of 2012, derivative instruments for 2.5 million pounds were settled at a loss of $0.3 million.

Non-recurring

     The following table presents the carrying value on the measurement date of any assets and liabilities which were measured at fair value and recorded at the lower of cost or fair value, on a non-recurring basis, using significant unobservable inputs (Level 3), and the corresponding non-recurring losses recognized during the nine months ended (in thousands):

		September 30, 2012				September 30, 2011
		Carrying		Non-Recurring		Carrying	Non-Recurring
		Value		Losses		Value	Losses
Assets
Vacant owned facilities	$	5,794	$	486	$	10,123	$	-
Other intangible assets		-		1,228		-		-
Net assets of acquired
businesses		1,345		-		37,340		-
Total assets	$	7,139	$	1,714	$	47,463	$	-
Liabilities
Vacant leased facilities	$	-	$	10	$	583	$	203
Total liabilities	$	-	$	10	$	583	$	203

Vacant Owned Facilities

     During the first nine months of 2012, the Company reviewed the recoverability of the carrying value of eight vacant owned facilities. The determination of fair value was based on the best information available, including internal cash flow estimates, market prices for similar assets, broker quotes and independent appraisals, as appropriate. During the first nine months of 2012, the carrying value of three of these vacant owned facilities exceeded their fair value, therefore an impairment charge of $0.5 million was recorded in selling, general, and administrative expenses in the Condensed Consolidated Statements of Income. During the first nine months of 2012, the Company sold at carrying value two of the facilities previously recorded as a vacant facility and reopened another. At September 30, 2012, the Company had five vacant owned facilities, with an estimated combined fair value of $5.8 million, classified in fixed assets in the Condensed Consolidated Balance Sheets. The Company has leased to third parties two of these owned facilities with a combined carrying value of $3.8 million, both for five year terms, for a combined rental income of $0.4 million annually. Both of these leases also contain an option for the lessee to purchase the facility at an amount in excess of carrying value.

     During the first nine months of 2011, the fair value of vacant owned facilities exceeded their carrying value, therefore no impairment charges were recorded.

Other Intangible Assets

     During the first nine months of 2012, the Company reviewed the recoverability of amortizable intangible assets associated with an acquired patent. Based on the analyses, the $1.2 million carrying value of these intangible assets exceeded the undiscounted cash flows expected to be generated. As a result, the Company was required to determine the fair value of these intangible assets. Fair value was determined based on the present value of internal cash flow estimates. The resulting fair value of these intangible assets was nominal, therefore the Company recorded a non-cash impairment charge of $1.2 million, of which $1.0 million was recorded in cost of sales in the Condensed Consolidated Statements of Income.

Net Assets of Acquired Businesses

     The Company valued the assets and liabilities associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of asset or liability acquired, the Company used different valuation techniques in determining the fair value. Those techniques included comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions, a market participant's weighted average cost of capital, as well as other techniques as circumstances required. For further information on acquired assets and liabilities, see Note 3 of the Notes to Condensed Consolidated Financial Statements.

Vacant Leased Facilities

     The Company recorded a charge of less than $0.1 million in selling, general and administrative expenses in the Condensed Consolidated Statements of Income in the first nine months of 2012 due to the early termination of leases of vacant facilities by the lessor. In the first nine months of 2011, the Company recorded a charge of $0.2 million in selling, general and administrative expenses in the Condensed Consolidated Statements of Income related to the exit from leased facilities.