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Fair Value Measurements
 6 Months Ended
Jun. 30, 2012
Fair Value Measurements [Abstract]  
FAIR VALUE MEASUREMENTS

NOTE 10 – FAIR VALUE MEASUREMENTS

Fair value is 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 (exit price). The Company utilizes a mid-market pricing convention for valuing the majority of its assets and liabilities measured and reported at fair value. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the observability of those inputs. The Company 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). Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. In the first half year ended June 30, 2012, the Company evaluated the fair value hierarchy levels assigned to its assets and liabilities, and concluded that there should be no transfers into or out of Levels 1, 2 and 3.

The following table presents the carrying amount and fair values of the Company’s assets and liabilities measured on a recurring basis:

 

 

                                 
    June 30, 2012     December 31, 2011  

(in millions)

   Carrying
Amount		     Fair
Value		     Carrying
Amount		     Fair
Value		  

Assets

                                

Non-derivatives:

                                

Cash and cash equivalents

   $ 105.8     $ 105.8     $ 76.2     $ 76.2  

Short-term investments

     4.7       4.7       4.8       4.8  

Non-financial assets (Level 3 measurement):

                                

Goodwill – Octane Additives

     1.8       1.8       2.6       2.6  

Derivatives (Level 1 measurement):

                                

Other non-current assets – commodity swaps

     0.0       0.0       0.2       0.2  

Liabilities

                                

Non-derivatives:

                                

Long-term debt (including current portion)

     40.0       40.0       35.0       35.0  

Non-financial liabilities (Level 3 measurement):

                                

Plant closure provisions – remediation

     27.3       27.3       27.1       27.1  

Derivatives (Level 1 measurement):

                                

Other non-current liabilities:

                                

Interest rate swaps

     0.0       0.0       0.1       0.1  

Commodity swaps

     0.1       0.1       0.0       0.0  

Foreign currency forward exchange contracts

   $ 0.1     $ 0.1     $ 0.5     $ 0.5  

 

The cumulative gains and losses on the interest rate swaps and commodity swaps are summarized as follows:

 

 

                 

(in millions)

   2012     2011  

Balance at January 1

   $ 0.1     $ 1.2  

Change in fair value

     (0.2 )      0.0  
   

 

 

    

 

 

  

Balance at June 30

   $ (0.1 )    $ 1.2  
   

 

 

    

 

 

  

The commodity swaps are used to manage the Company’s cash flow exposure to raw material cost volatility. They were designated as cash flow hedges and qualified for hedge accounting as at December 31, 2011. At March 31, 2012, the commodity hedges were determined to be ineffective and consequently a gain of $0.1 million was recognized in earnings. The commodity hedges will likely remain ineffective for the remainder of their term and accordingly all subsequent changes in their fair value are being recognized in earnings.

Foreign currency forward exchange contracts primarily relate to contracts entered into to hedge future known transactions or hedge balance sheet net cash positions. The movements in the carrying amounts and fair values of these contracts are largely due to changes in exchange rates against the U.S. dollar.