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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2012
Fair Value Measurements [Abstract] |
Fair Value Measurements | Note 15. 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 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:
|  | December 31, 2012 |  |  | December 31, 2011 |
(in millions) |  | Carrying Amount |  |  | Fair Value |  |  | Carrying Amount |  |  | Fair Value |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 22.4 |  |  | $ | 22.4 |  |  | $ | 76.2 |  |  | $ | 76.2 |
Short-term investments |  |  | 5.1 |  |  |  | 5.1 |  |  |  | 4.8 |  |  |  | 4.8 |
Non-financial assets (Level 3 measurement): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill – Octane Additives |  |  | 1.3 |  |  |  | 1.3 |  |  |  | 2.6 |  |  |  | 2.6 |
Derivatives (Level 1 measurement): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other non-current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity swaps |  |  | 0.1 |  |  |  | 0.1 |  |  |  | 0.2 |  |  |  | 0.2 |
Foreign currency forward exchange contracts |  |  | 0.8 |  |  |  | 0.8 |  |  |  | 0.0 |  |  |  | 0.0 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt (including current portion) |  |  | 30.0 |  |  |  | 30.0 |  |  |  | 35.0 |  |  |  | 35.0 |
Non-financial liabilities (Level 3 measurement): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisition-related contingent consideration |  |  | 4.3 |  |  |  | 4.3 |  |  |  | 0.0 |  |  |  | 0.0 |
Derivatives (Level 1 measurement): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other non-current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 0.0 |  |  |  | 0.0 |  |  |  | 0.1 |  |  |  | 0.1 |
Foreign currency forward exchange contracts |  | $ | 0.0 |  |  | $ | 0.0 |  |  | $ | 0.5 |  |  | $ | 0.5 |
The following methods and assumptions were used to estimate the fair values of financial instruments: Cash and cash equivalents, and short-term investments: The carrying amount approximates fair value because of the short-term maturities of such instruments. Long-term debt: Long-term debt comprises the revolving credit facility and the promissory note, which were entered into in December 2011 and September 2011, respectively. The carrying amount of long-term debt approximates fair value. Acquisition-related contingent consideration: Deferred consideration payable in cash is discounted to its fair value. Where deferred consideration is contingent upon pre-determined financial targets, an estimate of the fair value of the likely consideration payable is made. Derivatives: The fair value of derivatives relating to interest rate swaps, foreign currency forward exchange contracts and commodity swaps are derived from current settlement prices and comparable contracts using current assumptions. 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 |  |  | 0.0 |  |  |  | (1.1 | )
Balance at December 31 |  | $ | 0.1 |  |  | $ | 0.1 |
On June 12, 2009, the Company entered into $50.0 million of interest rate swaps which were amortized and matured between February 2010 and February 2012 in line with the long-term debt maturity profile of our previous finance facility. We repaid the previous finance facility upon entering into the new credit facility in December 2011, at which point the remaining interest rate swaps were rendered ineffective and the associated fair value loss of $0.1 million recognized in earnings. The interest rate swaps qualified for hedge accounting until this point. 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 throughout the year ended 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. At December 31, 2011, the commodity hedges were determined to be effective and consequently an unrealized gain of $0.2 million was recorded in other comprehensive income. 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.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13504-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15C, 15D -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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