Fair value measurements

9 Months Ended

Sep. 30, 2011

Fair value measurements

9. Fair value measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Non-financial assets and liabilities of the Company measured at fair value include any long-lived assets or equity method investments that are impaired in a currently reported period. The authoritative guidance also describes three levels of inputs that may be used to measure fair value:

Level 1 –	quoted prices in active markets for identical assets and liabilities
Level 2 –	observable inputs other than quoted prices in active markets for identical or similar assets and liabilities
Level 3 –	unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions

As of September 30, 2011, the Company held financial instruments including cash equivalents, restricted cash, accounts receivable, short-term bank borrowings, accounts payable, long-term secured debt and a cross-currency derivative contract. Cash equivalents, restricted cash, accounts receivable, short-term bank borrowings and accounts payable approximate fair value due to the short-term maturities of these instruments. The Credit Facilities carry a floating rate of interest, and therefore, the carrying value is considered to approximate the fair value.

The Company’s cross-currency derivative instrument is the only financial instrument recorded at fair value on a recurring basis. This instrument consists of an over-the-counter contract, which is not traded on a public exchange. The fair value of the swap contract is determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized the swap contract as a Level 2 fair value measurement. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. The Company has consistently applied these valuation techniques in all periods presented.

The fair value of the Company’s financial assets and liabilities on a recurring basis were as follows:

(US$ in thousands)	Balance September  30, 2011			Level 1		Level 2			Level 3
Derivative financial instruments (1)
Cash flow hedges
Cross-currency hedge	$	251		$	0	$	251		$	0
(US$ in thousands)	Balance December 31, 2010			Level 1		Level 2			Level 3
Derivative Financial Instruments (1)
Cash Flow Hedges
Cross currency hedge	$	(262	)	$	—	$	(262	)	$	—

(1) See Note 8.