Note 11 - Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Text Block]

11.  Fair Value of Assets and Liabilities:

The Company’s financial instruments include cash and cash equivalents, short-term trade receivables, derivative instruments, accounts payable and debt instruments. For short-term instruments, other than those required to be reported at fair value on a recurring basis and for which additional disclosures are included below, management concluded the historical carrying value is a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization.

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.  Fair value is an exit price concept that assumes an orderly transaction between willing market participants.  Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs.  To measure fair value, the Company applies a fair value hierarchy that is based on three levels of input, of which the first two are considered observable and the last unobservable, as follows:

Level 1 – Quoted prices in active markets for identical assets and liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices that are not active; or other inputs that are observable or can be corroborated by observable market date for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

During 2012 and 2011, there were no transfers of financial assets between Levels 1, 2 or 3 fair value measurements.  There have been no changes in the methodologies used at December 31, 2012 and December 31, 2011.  Following is a description of the valuation methodologies used for assets and liabilities measured at fair value as of December 31, 2012 and December 31, 2011:

Nickel swaps and embedded customer derivatives – Determined by using inputs that include the price of nickel indexed to the LME.  The fair value is determined based on quoted market prices and reflects the estimated amounts the Company would pay or receive to terminate the nickel swaps.

Interest rate swap – Based on the present value of the expected future cash flows, considering the risks involved, and using discount rates appropriate for the maturity date.  Market observable Level 2 inputs are used to determine the present value of future cash flows.

Goodwill – Based on using a discounted cash flow methodology, an income approach, and a publicly traded companies guideline method, a market approach.  Management’s assumptions used for the calculations are based on historical results, projected financial information and recent economic events.

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

	Value of Items Recorded at Fair Value As of December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Embedded customer derivatives	$	-	$	113	$	-	$	113
Total assets at fair value	$	-	$	113	$	-	$	113
Liabilities:
Nickel swaps		-		168		-		168
Interest rate swap		-		446		-		446
Fixed interest rate swap				941				941
Total liabilities at fair value	$	-	$	1,555	$	-	$	1,555

	Value of Items Not Recorded at Fair Value As of December 31, 2012
	Level 1		Level 2		Level 3		Total
Liabilities:
Debt
IRB	$	5,125	$	-	$	-	$	5,125
Term loan		-		57,604		-		57,604
Revolver		-		177,575		-		177,575
Total liabilities not recorded at fair value	$	5,125	$	235,179	$	-	$	240,304

The value of the items not recorded at fair value represent the carrying value of the liabilities.

	Value of Items Recorded at Fair Value As of December 31, 2011
	Level 1		Level 2		Level 3		Total
Assets:
Embedded customer derivatives	$	-	$	55	$	-	$	55
Total assets at fair value	$	-	$	55	$	-	$	55
Liabilities:
Nickel swaps		-		55		-		55
Interest rate swap		-		492		-		492
Total liabilities at fair value	$	-	$	547	$	-	$	547

	Value of Items Not Recorded at Fair Value As of December 31, 2011
	Level 1		Level 2		Level 3		Total
Liabilities:
Debt
IRB	$	5,880	$	-	$	-	$	5,880
Term loan		-		66,354		-		66,354
Revolver		-		170,405		-		170,405
Total liabilities not recorded at fair value	$	5,880	$	236,759	$	-	$	242,639

The value of the items not recorded at fair value represent the carrying value of the liabilities.

The fair value of the IRB is determined using Level 1 inputs.  The carrying value and the fair value of the IRB that qualify as financial instruments were $5,125 and $5,880, respectively, at both December 31, 2012 and 2011.

The fair values of the revolver and term loan are determined using Level 2 inputs. The carrying values of the revolver and the term loan were $177,575 and $57,604, respectively, at December 31, 2012.  The carrying value of the revolver and the term loan were $170,405 and $66,354, respectively, at December 31, 2011.  The Level 2 fair value of the Company's long-term debt was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities.

	Assets Measured at Fair Value on a Nonreccuring Basis
	12/31/2012		Level 1		Level 2		Level 3		Total Gain/ (Loss)
Goodwill (Southern region)	$	-	$	-	$	-	$	-	$	(6,583	)
Total	$	-	$	-	$	-	$	-	$	(6,583	)