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Fair Value Measurements
 12 Months Ended
Dec. 31, 2011
Fair Value Measurements [Abstract]  
Fair Value Measurements
17. Fair Value Measurements

The following table provides information on assets and liabilities measured at fair value on a recurring basis. No events occurred during the twelve months ended December 31, 2011, requiring adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis.

 

     Carrying
Amount in
Consolidated
Balance Sheets		      Fair Value      Fair Value Measurements Using  
             Level 1          Level 2          Level 3    
     December 31, 2011  

Cash and cash equivalents

    $ 50,370       $ 50,370       $ 50,370       $ 0       $ 0   

Marketable securities

      5,208         5,208         0         5,208         0   

Interest rate swaps liability

      35,790         35,790         0         35,790         0   
     December 31, 2010  

Cash and cash equivalents

    $ 49,192       $ 49,192       $ 49,192       $ 0       $ 0   

Short-term investments

      300         300         300         0         0   

Interest rate swaps liability

      22,112         22,112         0         22,112         0   

We determine the fair value of the derivative instruments shown in the table above by using widely-accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. The analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs.

The fair value of the interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates derived from observable market interest rate curves. In determining the fair value measurements, we incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk and the counterparties' nonperformance risk.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustment associated with the derivatives utilizes Level 3 inputs. These Level 3 inputs include estimates of current credit spreads to evaluate the likelihood of default by both us and the counterparties to the derivatives. As of December 31, 2011 and December 31, 2010, we have assessed the significance of the impact of the credit valuation adjustment on the overall valuation of our derivatives and have determined that the credit valuation adjustment is not significant to the overall valuation of the derivatives. Accordingly, we have determined that our derivative valuations should be classified in Level 2 of the fair value hierarchy.

The marketable securities in the table above represent the 195,313 shares of unregistered Innospec Inc. common stock that we own. See Note 18 for further information. The fair value of the common stock is determined using the closing market price of Innospec Inc. common stock at December 31, 2011, discounted for transfer restrictions on the shares. While the Innospec Inc. common stock is traded on a national exchange and the market price is a Level 1 input in the fair value hierarchy, the discount factor utilizes Level 3 inputs. We have assessed the significance of the impact of the discount factor adjustment on the overall valuation of the marketable securities and have determined that it is not significant to the overall valuation of the marketable securities. Accordingly, we have determined that our marketable securities valuation should be classified in Level 2 of the fair value hierarchy as the valuation relies on quoted prices for similar assets in an active market.

Long-Term Debt—We record the value of our long-term debt at historical cost. The estimated fair value of our long-term debt is shown in the table below and is based primarily on estimated current rates available to us for debt of the same remaining duration and adjusted for nonperformance risk and credit risk.

 

     2011      2010  
     Carrying
Amount		      Fair
Value		      Carrying
Amount		      Fair
Value		  

Long-term debt, including current maturities

    $ 243,567       $ 252,557       $ 221,913       $ 230,393