Fair Value Measurements

9 Months Ended

Sep. 30, 2019

NOTE 11 – FAIR VALUE MEASUREMENTS

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


	September 30, 2019				December 31, 2018
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Non-derivatives:
Cash and cash equivalents	$	110.3	$	110.3	$	123.1	$	123.1
Derivatives (Level 1 measurement):
Other current and non-current assets:
Interest rate swaps		0.1		0.1		1.9		1.9

Liabilities
Non-derivatives:
Long-term debt (including current portion)	$	131.2	$	131.2	$	207.6	$	207.6
Finance leases (including current portion)		1.8		1.8		3.3		3.3
Derivatives (Level 1 measurement):
Other current and non-current liabilities:
Foreign currency forward exchange contracts		0.0		0.0		0.7		0.7
Non-financial liabilities (Level 3 measurement):
Stock equivalent units		19.6		19.6		15.1		15.1

The following methods and assumptions were used to estimate the fair values of financial instruments:

Cash and cash equivalents and bank overdraft:

The carrying amount approximates fair value because of the short-term maturities of such instruments.

Derivatives:

The fair value of derivatives relating to foreign currency forward exchange contracts and interest rate swaps are derived from current settlement prices and comparable contracts using current assumptions. 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. Interest rate swaps relate to contracts taken out to hedge interest rate risk on a portion of our credit facilities borrowing.

Long-term debt and finance leases:

Long-term debt comprises the revolving credit facility and a term loan in the prior year, which are shown net of deferred finance costs that have been capitalized. The fair value of long-term debt approximates to the carrying value, as the discounting to its present value is offset by the interest rate swaps. Finance leases relate to certain fixed assets in our Fuel Specialties and Oilfield Services segments. The carrying amount of long-term debt and finance leases approximates to the fair value.

Stock equivalent units:

The fair values of stock equivalent units are calculated at each balance sheet date using either the Black-Scholes or Monte Carlo method depending on the terms of each grant.