Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements

Fair Value Measurements

NOTE 3—FAIR VALUE MEASUREMENTS

The Company uses the fair value hierarchy, which prioritizes the inputs used to measure the fair value of certain of its financial instruments.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).  The Company uses the income and market approaches to determine the fair value of its assets and liabilities.  The three levels of the fair value hierarchy are set forth below:

•   Level 1  –  Observable inputs that reflect quoted prices in active markets.

·Level 2  –  Inputs other than quoted prices in active markets that are either directly or indirectly observable.

·Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions.

The Company did not have transfers between levels within the hierarchy during the years ended December 31, 2011 or 2010.

Financial assets and liabilities measured at fair value on a recurring basis:

The fair value of the Company's outstanding interest rate swap contracts, as discussed in Note 5 and Note 7, was included in "Other current liabilities" on the accompanying Consolidated Balance Sheets as of December 31, 2010.  The fair value of the interest rate swap contracts was based on the discounted net present value of the swaps using third party quotes (Level 2).  Changes in fair market value were recorded in "Accumulated other comprehensive loss" on the accompanying Consolidated Balance Sheets, and changes resulting from the termination of the interest rate swap contracts were recorded in "Other income (expense)" on the accompanying Consolidated Statements of Income.  All of the interest rate swap contracts that existed as of December 31, 2010, were terminated at the Company's request on January 14, 2011, concurrent with the retirement of the ABL Credit Facility and the issuance of the 4.875% Senior Notes due 2021, as discussed in Note 5 and Note 7.  

The table below identifies the estimated fair value of the Company's interest rate swap contracts, using the discounted net present value of the swap using third party quotes (Level 2), as of December 31, 2010 (in thousands):

December 31, 2010
		Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
		(Level 1)		(Level 2)		(Level 3)
Derivative contracts	$	-	$	(4,845)	$	-	$	(4,845)

Non-financial assets and liabilities measured at fair value on a nonrecurring basis:

Certain long-lived non-financial assets and liabilities may be required to be measured at fair value on a nonrecurring basis in certain circumstances, including when there is evidence of impairment.  These non-financial assets and liabilities may include assets acquired in a business combination or property and equipment that are determined to be impaired.  As of December 31, 2011 and 2010, the Company did not have any non-financial assets or liabilities that had been measured at fair value subsequent to initial recognition.

Fair value of financial instruments:

The carrying amounts of the Company's senior notes are included in "Long-term debt, less current portion" on the accompanying Consolidated Balance Sheets as of December 31, 2011.  The table below identifies the estimated fair value of the Company's senior notes, using the market approach, as of December 31, 2011, which was determined by reference to quoted market prices (Level 1) (in thousands):

December 31, 2011
		Quoted Prices in Active Markets for Identical Instruments		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
		(Level 1)		(Level 2)		(Level 3)
4.875% Senior Notes due 2021	$	533,150	$	-	$	-	$	533,150
4.625% Senior Notes due 2021	$	313,830	$	-	$	-	$	313,830

The carrying amount of the Company's ABL Credit Facility as of December 31, 2010, was $356 million and was included in "Long-term debt, less current portion" on the accompanying Consolidated Balance Sheets at that time. The Company determined that the estimated fair value of its ABL Credit Facility approximated the carrying amount. This valuation was determined by consulting investment bankers (Level 2). All outstanding borrowings under the ABL Credit Facility were repaid on January 14, 2011, and the facility was retired concurrent with the issuance of the Company's 4.875% Senior Notes due 2021 as discussed in Note 5.

The accompanying Consolidated Balance Sheets include other financial instruments, including cash and cash equivalents, accounts receivable, amounts receivable from vendors and accounts payable.  Due to the short-term nature of these financial instruments, the Company believes that the carrying values of these instruments approximate their fair values.